Cablevision Systems Corporation (NYSE:CVC) today reported
financial results for the first quarter ended March 31,
2015.
First quarter consolidated net revenues increased 2.5% to
$1.615 billion, consolidated adjusted operating cash flow
(“AOCF”)1 increased 4.5% to $454.0 million and consolidated
operating income increased 8.0% to $223.8 million, all
compared with the prior year period.
Operating highlights for the first quarter include:
- Average Monthly Cable Revenue per
Customer ("RPC") of $155.34, an increase of $7.12 or 4.8%, compared
with the prior year period.
- Consolidated Free Cash Flow from
Continuing Operations1 of $49.0 million.
Cablevision CEO James L. Dolan said, "Cablevision had a solid
start to 2015 with growth in net revenue, AOCF and revenue per
customer. As we move through the year, we will continue to address
evolving consumer demand by expanding our product offerings to
provide greater value and flexibility. Connectivity is the wave of
the future, and we plan to leverage our industry-leading position
to be the preferred choice for consumers in our market."
1. See definition of AOCF and Consolidated Free Cash Flow from
Continuing Operations included in the discussion of non-GAAP
financial measures on page 3 of this earnings release.
Cable
Cable includes our Optimum-branded digital cable television,
high-speed Internet and voice services as well as Optimum WiFi, the
nation's most robust WiFi network.
Cable net revenues for the first quarter 2015 increased 2.4% to
$1.452 billion, AOCF increased 0.8% to $446.6 million and
operating income increased 1.0% to $252.1 million, all
compared with the prior year period. First quarter net revenue
growth primarily reflects rate initiatives and continued
disciplined pricing strategies, partially offset by a decline in
customers. First quarter AOCF reflects the increase in revenue and
lower employee and customer service-related costs, partially offset
by higher programming and marketing costs, as compared to the prior
year period.
The following table illustrates the change in the Cable customer
base during the first quarter of 2015:
Customer
Data
(rounded to nearest thousand)
TotalDecember 31, 2014
Net Gain/(Loss)
TotalMarch 31, 2015
Total Customers(a)
3,118 (6)
3,112 Video 2,681 (28)
2,653 High-Speed Data 2,760 7
2,767 Voice 2,229 (14) 2,215
Serviceable Passings 5,046
9 5,055
(a) Total customers are defined as the number of
households/businesses that receive at least one of the Company's
services.
Lightpath
Lightpath is a premier provider of integrated business
communications solutions to large and mid-sized commercial
organizations across the New York metropolitan area.
For the first quarter 2015, Lightpath net revenues increased
5.0% to $91.1 million, AOCF increased 12.8% to
$43.4 million and operating income increased 10.4% to
$19.3 million, each as compared with the prior year period.
First quarter results primarily reflect an increase in revenue from
Ethernet services.
Other
Other principally consists of Newsday, News 12 Networks,
Cablevision Media Sales Corporation and certain other businesses
and unallocated corporate costs.
First quarter net revenues increased 0.4% to $81.8 million,
AOCF deficit decreased 23.9% to $35.9 million and operating
loss decreased 20.6% to $47.6 million, all compared with the
prior year period. First quarter net revenue growth primarily
reflects increased advertising revenue at News 12 Networks
partially offset by lower advertising revenue at Newsday. First
quarter AOCF reflects a decrease in expenses at Newsday due to
lower operating costs and a distribution agreement settlement, as
well as reduced expenses at corporate and certain other
businesses.
Other Matters
On May 1, 2015, the Board of Directors of Cablevision declared a
quarterly dividend of $0.15 per share on each outstanding
share of Cablevision NY Group Class A Common Stock and Cablevision
NY Group Class B Common Stock. This quarterly dividend is payable
on June 12, 2015 to shareholders of record at the close
of business on May 22, 2015.
There were no stock repurchases during the first quarter of
2015. As of March 31, 2015, Cablevision had approximately $455
million available under its stock repurchase authorization.
Non-GAAP Financial Measures
We define adjusted operating cash flow (“AOCF”), which is a
non-GAAP financial measure, as operating income (loss) before
depreciation and amortization (including impairments), excluding
share-based compensation expense and restructuring charges or
credits. Because it is based upon operating income (loss), AOCF
also excludes interest expense (including cash interest expense)
and other non-operating income and expense items. We believe that
the exclusion of share-based compensation expense allows investors
to better track the performance of the various operating units of
our business without regard to expense associated with awards of
restricted shares, restricted stock units and stock options that
are not expected to be made in cash.
We present AOCF as a measure of our ability to service our debt
and make continuing investments, including in our capital
infrastructure. We believe AOCF is an appropriate measure for
evaluating the operating performance of our business segments and
the company on a consolidated basis. AOCF and similar measures with
similar titles are common performance measures used by investors,
analysts and peers to compare performance in our industry.
Internally, we use net revenues and AOCF measures as the most
important indicators of our business performance, and evaluate
management’s effectiveness with specific reference to these
indicators. AOCF should be viewed as a supplement to and not a
substitute for operating income (loss), net income (loss), cash
flows from operating activities, and other measures of performance
and/or liquidity presented in accordance with U.S. generally
accepted accounting principles ("GAAP"). Since AOCF is not a
measure of performance calculated in accordance with GAAP, this
measure may not be comparable to similar measures with similar
titles used by other companies. For a reconciliation of AOCF to
operating income (loss), please see page 6 of this release.
We define Consolidated Free Cash Flow from Continuing Operations
(“Free Cash Flow”), which is a non-GAAP financial measure, as net
cash from operating activities (continuing operations) plus any
excess tax benefit related to share-based awards less capital
expenditures (continuing operations), all of which are reported in
our Consolidated Statement of Cash Flows. Net cash from operating
activities excludes net cash from operating activities of our
discontinued operations. We believe the most comparable GAAP
financial measure of our liquidity is net cash from operating
activities. We believe that Free Cash Flow is useful as an
indicator of our overall liquidity, as the amount of Free Cash Flow
generated in any period is representative of cash that is available
for debt repayment and other discretionary and non-discretionary
cash uses. It is also one of several indicators of our ability to
make investments and/or return capital to our shareholders. We also
believe that Free Cash Flow is one of several benchmarks used by
analysts and investors who follow our industry for comparison of
our liquidity with other companies in our industry, although our
measure of Free Cash Flow may not be directly comparable to similar
measures reported by other companies.
ABOUT CABLEVISION
Cablevision Systems Corporation (NYSE: CVC) is a leading media
and telecommunications company, serving millions of households and
businesses throughout the greater New York area. Providing quality
products that keep customers connected, Cablevision offers
Optimum-branded digital cable television, high-speed Internet and
voice services as well as Optimum WiFi, the nation's most robust
WiFi network. Cablevision’s Lightpath subsidiary is a premier
provider of integrated business communications solutions for larger
companies. Through its local media and programming properties –
News 12 Networks and Newsday Media Group – Cablevision also
delivers news and information created specifically for the
communities it serves. Additional information about Cablevision is
available at www.cablevision.com.
This earnings release may contain statements that constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Investors are
cautioned that any such forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties, and that actual results or developments may differ
materially from those in the forward-looking statements as a result
of various factors, including financial community and rating agency
perceptions of the company and its business, operations, financial
condition and the industries in which it operates and the factors
described in the company’s filings with the Securities and Exchange
Commission, including the sections entitled "Risk Factors" and
"Management’s Discussion and Analysis of Financial Condition and
Results of Operations" contained therein. The company
disclaims any obligation to update any forward-looking statements
contained herein.
Cablevision’s website: www.cablevision.com
The conference call will be webcast live today at 10:00 a.m.
ET
Conference call dial-in number is (888) 694-4641 / Conference ID
Number 27267807 / Conference call replay number (855) 859-2056 /
Conference ID Number 27267807 until May 11, 2015.
CABLEVISION SYSTEMS
CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF
INCOME(Dollars in thousands, except per share
data)(Unaudited)
Three Months Ended March 31, 2015
2014 Revenues, net $ 1,614,771 $ 1,575,586
Operating expenses Technical and operating 795,888 772,983
Selling, general and administrative 376,764 380,220 Restructuring
expense (credits) (532 ) 1,015 Depreciation and amortization
218,900 214,285 Operating income 223,751 207,083
Other income (expense): Interest expense, net (145,012 ) (140,882 )
Loss on investments, net (33,071 ) (41,775 ) Gain on equity
derivative contracts, net 46,166 38,649 Write-off of deferred
financing costs, net of gain on extinguishment of debt — (611 )
Miscellaneous, net 1,007 731 Income from continuing
operations before income taxes 92,841 63,195 Income tax benefit
(expense) (a) (37,940 ) 26,939 Income from continuing
operations 54,901 90,134 Loss from discontinued operations, net of
income taxes (b) (10,502 ) (434 ) Net income 44,399 89,700 Net loss
attributable to noncontrolling interests 234 63 Net
income attributable to Cablevision Systems Corporation stockholders
$ 44,633 $ 89,763
Basic income (loss) per
share attributable to Cablevision Systems Corporation
stockholders: Income from continuing operations $ 0.21 $
0.34 Loss from discontinued operations $ (0.04 ) $ —
Net income $ 0.17 $ 0.34 Basic weighted average
common shares (in thousands) 267,919 262,328
Diluted
income (loss) per share attributable to Cablevision Systems
Corporation stockholders: Income from continuing operations $
0.20 $ 0.34 Loss from discontinued operations $ (0.04
) $ — Net income $ 0.16 $ 0.33 Diluted
weighted average common shares (in thousands) 274,370 268,224
Amounts attributable to Cablevision Systems Corporation
stockholders: Income from continuing operations, net of income
taxes $ 55,135 $ 90,197 Loss from discontinued operations, net of
income taxes (10,502 ) (434 ) Net income $ 44,633 $ 89,763
Cash dividends declared per share of common stock $
0.15 $ 0.15 (a) Income tax benefit for
the three months ended March 31, 2014 includes a tax benefit of
$53,132 resulting from the reversal of an uncertain tax position
liability. (b)
For the three months ended March 31, 2015,
the Company recorded an expense of $10,502, net of income taxes,
with respect to the decision in a case relating to Rainbow Media
Holdings LLC, a business whose operations were previously
discontinued.
CABLEVISION SYSTEMS
CORPORATIONRECONCILIATION OF OPERATING INCOME TO ADJUSTED
OPERATING CASH FLOW AND CONSOLIDATED FREE CASH FLOW FROM
CONTINUING OPERATIONS(Dollars in
thousands)(Unaudited)
RECONCILIATION OF
OPERATING INCOME TO ADJUSTED OPERATING CASH
FLOW(a)
Three Months EndedMarch 31,
2015 2014 Operating income $ 223,751 $ 207,083
Share-based compensation expense 11,911 11,906 Restructuring
expense (credits)
(532)
1,015 Depreciation and amortization 218,900 214,285 Adjusted
operating cash flow $ 454,030 $ 434,289
CONSOLIDATED FREE
CASH FLOW FROM CONTINUING OPERATIONS(a)
Three Months Ended March 31, 2015
2014 Net cash provided by operating
activities(b) $ 215,334 $ 283,682 Add: excess tax benefits related
to share-based awards 275 488 Less: capital expenditures(c)
(166,631) (186,075) Consolidated free cash flow from continuing
operations $ 48,978 $ 98,095 (a) See Non-GAAP
Financial Measures on page 3 of this release for a definition and
discussion of AOCF and Free Cash Flow from Continuing Operations.
(b) The level of net cash provided by operating activities will
continue to depend on a number of variables in addition to our
operating performance, including the amount and timing of our
interest payments and other working capital items. (c) See page 10
of this release for additional details relating to capital
expenditures.
CABLEVISION SYSTEMS
CORPORATIONCONSOLIDATED RESULTS FROM CONTINUING
OPERATIONS(Dollars in thousands)(Unaudited)
REVENUES,
NET
Three Months Ended March 31,
% 2015 2014 Change Cable $ 1,451,538 $
1,417,148 2.4 % Lightpath 91,124 86,754 5.0 % Other(a) 81,780
81,482 0.4 % Eliminations(b) (9,671) (9,798) 1.3 %
Total
Cablevision $ 1,614,771 $ 1,575,586
2.5 %
ADJUSTED
OPERATING CASH FLOW AND OPERATING INCOME (LOSS)
Adjusted OperatingCash Flow
Operating Income (Loss)
Three Months EndedMarch 31,
%
Three Months EndedMarch 31,
% 2015 2014 Change 2015 2014 Change
Cable $ 446,555 $ 443,032 0.8 % $ 252,099 $ 249,621 1.0 %
Lightpath 43,395 38,483 12.8 % 19,275 17,464 10.4 % Other(c)
(35,920) (47,226) 23.9 % (47,623) (60,002) 20.6 %
Total
Cablevision $ 454,030 $ 434,289
4.5 % $ 223,751 $ 207,083
8.0 % (a) Represents revenues of
Newsday, News 12 Networks, Cablevision Media Sales Corporation and
certain other entities. (b) Represents inter-segment revenues. (c)
Includes unallocated corporate general and administrative costs and
the operating results of Newsday, News 12 Networks, Cablevision
Media Sales Corporation, and certain other entities.
CABLEVISION SYSTEMS
CORPORATIONSUMMARY OF CABLE OPERATING
STATISTICS(Unaudited)
CABLE
March 31,2015
December 31,2014
March 31,2014
(in thousands) Total Customers(a)
3,112
3,118
3,186
Video Customers
2,653
2,681
2,799
High-Speed Data Customers
2,767
2,760
2,788
Voice Customers
2,215
2,229
2,280
Serviceable
Passings (in thousands)(b)
5,055
5,046
5,048
Penetration Total Customers to Serviceable Passings
61.6% 61.8% 63.1% Video Customers to Serviceable Passings 52.5%
53.1% 55.4% High-Speed Data Customers to Serviceable Passings 54.7%
54.7% 55.2% Voice Customers to Serviceable Passings 43.8% 44.2%
45.2%
Revenues for
the three months ended
(dollars in millions)
Video(c) $ 801 $ 788 $ 793 High-Speed Data 363 359 347 Voice
232 230 220 Advertising 31 48 32 Other(d) 25 29
25 Total Cable Revenue $ 1,452 $ 1,454 $ 1,417
Average Monthly Cable Revenue per
Customer (“RPC”)(e)
$
155.34
$
155.20
$
148.22
(a) Represents the number of households/businesses
that receive at least one of the Company's services. (b) Includes
residential passings, as well as commercial establishments that
have connected to our cable distribution network. (c) Includes
equipment rental, DVR, franchise fees, video-on-demand and
pay-per-view revenue. (d) Includes installation revenue,
advertising sales commissions, home shopping and other product
offerings. (e) RPC is calculated by dividing average monthly Cable
GAAP revenue for the quarter by the average number of total
customers for the quarter.
CABLEVISION SYSTEMS
CORPORATIONCAPITALIZATION AND LEVERAGE(Dollars in
thousands)(Unaudited)
CAPITALIZATION
March 31, 2015 Cash and cash
equivalents $ 884,422 Credit facility debt $ 2,765,430
Senior notes and debentures 5,857,019 Collateralized indebtedness
1,033,040 Capital lease obligations and notes payable 63,889 Debt $
9,719,378
LEVERAGE
Debt $ 9,719,378 Less: Collateralized indebtedness of
unrestricted subsidiaries(a) 1,033,040
Cash and cash equivalents
884,422
Net debt
$ 7,801,916 Leverage Ratios(b) Consolidated net debt to AOCF
leverage ratio(a)(c) 4.3x Restricted Group leverage ratio (Credit
Facility Test)(d)(e) 2.9x CSC Holdings notes and debentures
leverage ratio(e)(f) 3.2x Cablevision senior notes leverage
ratio(e)(g) 5.0x (a) Collateralized indebtedness is
excluded from the leverage calculation because it is viewed as a
forward sale of the stock of an unaffiliated company and the
Company's only obligation at maturity is to deliver, at its option,
the stock or its cash equivalent. (b) Leverage ratios are based on
face amount of outstanding debt. (c) AOCF is annualized based on
the first quarter 2015 results, as reported. (d) Reflects the net
debt to cash flow ratio as defined in the CSC Holdings’ credit
facility debt agreement (which excludes approximately $2.8 billion
of Cablevision’s senior notes and the debt and cash flows related
to CSC Holdings’ unrestricted subsidiaries). The annualized AOCF
(as defined) used in the Restricted Group leverage ratio was $1.878
billion. (e) Includes CSC Holdings’ guarantee of Newsday LLC’s $480
million senior secured credit facility. (f) Reflects the debt to
cash flow ratio applicable under CSC Holdings' senior notes and
debentures indentures (which excludes approximately $2.8 billion of
Cablevision’s senior notes and the debt and cash flows related to
CSC Holdings’ unrestricted subsidiaries). The annualized AOCF (as
defined) used in the CSC Holdings notes and debentures leverage
ratio was $1.878 billion. (g) Adjusts the debt to cash flow ratio
as calculated under the CSC Holdings notes and debentures leverage
ratio to include approximately $2.8 billion of Cablevision’s senior
notes plus $611 million of Cablevision’s senior notes that were
contributed to Newsday Holdings LLC.
CABLEVISION SYSTEMS
CORPORATIONCAPITAL EXPENDITURES(Dollars in
thousands)(Unaudited)
Three Months EndedMarch 31,
2015 2014 Customer premise equipment $
42,593 $ 56,804 Scalable infrastructure 39,983 46,829 Line
extensions 6,481 1,236 Upgrade/rebuild 12,141 7,619 Support 32,373
32,837 Cable 133,571 145,325 Lightpath 23,732 26,870 Other(a) 9,328
13,880
Total Cablevision $ 166,631 $
186,075
(a) Other primarily includes Newsday, News 12 Networks,
Cablevision Media Sales Corporation and Corporate.
Cablevision Systems CorporationCharles Schueler,
516-803-1013Executive Vice PresidentMedia and Community
RelationsorCindi Buckwalter, 516-803-2264Senior Vice
PresidentInvestor Relations
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