WOW! Reports Fourth Quarter And Full Year 2020 Results

ENGLEWOOD, Colo., Feb. 24, 2021 /PRNewswire/ -- WideOpenWest, Inc. ("WOW!" or the "Company") (NYSE: WOW), one of the nation's leading broadband providers, with an efficient, high-performing network that passes more than three million residential, business and wholesale consumers, today announced financial and operating results for the quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights ⁽¹⁾

• Total Revenue of $293.2 million; Net Income of $3.1 million; Diluted Earnings Per Share of $0.04
• HSD Revenue totaled $150.7 million, an increase of $17.8 million or 13.4% compared to fourth quarter of 2019
• Added 4,900 HSD RGUs in the fourth quarter
• Adjusted EBITDA was $123.2 million with an Adjusted EBITDA margin of 42.0%
• Free Cash Flow totaled $9.5 million

Full Year 2020 Highlights ⁽¹⁾

• Total Revenue of $1,148.4 million; Net Income of $14.4 million; Diluted Earnings Per Share of $0.17
• HSD Revenue totaled $567.2 million, an increase of $46.2 million or 8.9% compared to 2019
• Added a record 32,300 HSD RGUs, a 36.3% increase compared to 2019 net additions
• Adjusted EBITDA was $437.1 million with an Adjusted EBITDA margin of 38.1%
• Free Cash Flow totaled $43.3 million

"I am really pleased with WOW!'s fourth quarter and full-year results, including continued momentum in our high-speed data business," said Teresa Elder, WOW!'s CEO. "The success of our broadband-first strategy allowed us to end 2020 with record high-speed data revenue of $567 million, up 9% from 2019. As demand for high-speed data grows, the investments we have made in our fiber-rich network allow us to provide customers with choice, reliability and value."

"Our operating discipline and growth in HSD resulted in increased free cash flow to a record $43.3 million for the year," said John Rego, WOW!'s CFO. "We delivered record HSD revenue for the fourth quarter and full year, resulting in growth in Adjusted EBITDA and Adjusted EBITDA margin. We added more HSD RGUs in 2020 than any previous year, further evidencing the shift in demand toward HSD consumption."

Revenue
Total Revenue was $293.2 million and $1,148.4 million for the quarter and year ended December 31, 2020, up $9.7 million and $2.6 million as compared to the corresponding periods in 2019.

Total Subscription Revenue for the quarter and year ended December 31, 2020, was $272.1 million and $1,070.1 million, up $10.4 million, or 4%, and $14.4 million, or 1%, as compared to the corresponding periods in 2019. These increases were driven by an increase in average revenue per unit ("ARPU") as HSD sell-in ARPU has increased coupled with periodic Video service rate increases and an increase in volume almost exclusively attributable to the addition of HSD subscribers. These increases were partially offset by a shift in service offering mix, as the Company continues to experience a reduction in Video and Telephony RGUs.

Other Business Services Revenue totaled $6.1 million and $25.3 million for the quarter and year ended December 31, 2020, down $0.3 million and $2.1 million as compared to the corresponding periods in 2019. These decreases were primarily due to decreases in data center revenue.

Other Revenue totaled $15.0 million and $53.0 million for the quarter and year ended December 31, 2020, down $0.4 million and $9.7 million compared to the corresponding periods in 2019, primarily due to decreases in advertising, late fee and line assurance revenue.

Costs and Expenses
Operating Expenses (excluding Depreciation and Amortization) totaled $135.8 million and $570.2 million for the quarter and year ended December 31, 2020, down $8.8 million, or 6%, and $5.6 million, or 1%, compared to the corresponding periods in 2019 primarily due to lower direct expenses, specifically programming expense, partially offset by increases in hardware and software expense. Selling, General, and Administrative expenses totaled $46.1 million and $182.5 million for the quarter and year ended December 31, 2020, up $8.7 million, or 23%, and $10.2 million, or 6%, compared to the corresponding periods in 2019 primarily due to increases in digital transformation initiatives and marketing expense.

Net Income and Earnings Per Share
Net Income for the quarter and year ended December 31, 2020, was $3.1 million and $14.4 million, compared to $6.9 million and $36.4 million for the year ended December 31, 2019. Diluted Earnings Per Share for the quarter and year ended December 31, 2020, was $0.04 and $0.17, compared to Diluted Earnings Per Share of $0.08 and $0.45 for the year ended December 31, 2019.

Adjusted EBITDA
Adjusted EBITDA for the quarter and year ended December 31, 2020, was $123.2 million and $437.1 million, an increase of $14.1 million and $1.8 million, compared to the corresponding periods in 2019. Adjusted EBITDA margin was 42.0% and 38.1% for the quarter and year ended December 31, 2020 as compared to 38.5% and 38.0% for the quarter and year ended December 31, 2019.

Customers
WOW! reported Total Subscribers of 850,600 as of December 31, 2020, an increase of 27,200, or 3.3%, compared to December 31, 2019, up 4,300 compared to September 30, 2020. HSD RGUs totaled 813,800 as of December 31, 2020, an increase of 32,300, or 4.1%, compared to December 31, 2019, up 4,900 compared to September 30, 2020.

Edge-Outs
Edge-Out Projects reached a total of 194,000 homes passed and 47,900 Subscribers since inception.

The 2018 Edge-Out projects include 6,200 Customers, which represents 20.3% penetration on such nodes. The 2019 Edge-Out projects include 8,000 Customers, which represents 16.3% penetration on such nodes. The 2020 Edge-Out projects now reach 6,100 homes passed.

Capital Expenditures
Capital Expenditures, on a reported basis, totaled $234.1 million for the year ended December 31, 2020, representing a $13.4 million, or 5.4%, decrease compared to the year ended December 31, 2019. The decrease is primarily due to a decrease in edge-out capital expenditures as the Company shifts its focus to penetration within its current footprint. Capital Expenditures for the year ended December 31, 2020 equates to 20.4% of Total Revenue for the year ended December 31, 2020.

Liquidity and Leverage
As of December 31, 2020, the total outstanding amount of long-term debt and finance lease obligations was $2.3 billion, and cash and cash equivalents were $12.4 million. Total Net Leverage as of December 31, 2020, was 5.18X on a LTM Adjusted EBITDA basis, down from 5.36X at September 30, 2020, and undrawn revolver capacity totaled $256.6 million. Free Cash Flow was $43.3 million for the year ended December 31, 2020.

Estimated COVID-19 Impacts
Estimated EBITDA impacts due to COVID-19 for the year ended December 31, 2020 total $12.7 million. The estimated impact is primarily attributable to decreases in advertising and late fee revenue, combined with increased marketing costs. 

First Quarter 2021 Guidance

Webcast
WOW! will host a webcast on Wednesday, February 24, 2021, at 5:00 p.m. Eastern to discuss the operating and financial results contained in this press release. The conference call and webcast will be broadcast live on the Company's investor relations website at ir.wowway.com. Those parties interested in participating can use the information as follows:

A replay of the call will be available on February 24, 2021, at 8:00 p.m. ET, on the investor relations website or by telephone. To access the telephone replay, which will be available until March 10, 2021, at 11:59 p.m. ET, please dial (800) 585-8367 and use conference ID 5177089.

 

               

 

About WOW!
WOW! is a leading broadband services provider offering high-speed data ("HSD"), cable television ("Video"), and digital telephony ("Telephony") services to residential and business customers.  Our vision is connecting people to their world through the WOW! experience: reliable, easy, and pleasantly surprising, every time. For more information, please visit www.wowway.com.

Cautionary Statement Regarding Forward-Looking Statements
Certain statements in this press release that are not historical facts contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events. Forward-looking statements include all statements that are not historical fact and can be identified by terms such as "may," "intend," "might," "will," "should," "could," "would," "anticipate," "expect," "believe," "estimate," "plan," "project," "predict," "potential," or the negative of these terms. Although these forward-looking statements reflect our good-faith belief and reasonable judgment based on current information, these statements are qualified by important factors, many of which are beyond our control that could cause our actual results to differ materially from those in the forward-looking statements. These factors and other risks that could cause our actual results to differ materially are set forth in the section entitled "Risk Factors" in our Annual Report filed on Form 10-K with the Securities and Exchange Commission ("SEC") and other reports subsequently filed with the SEC. Given these uncertainties, you should not place undue reliance on any such forward-looking statements. The forward-looking statements included in this report are made as of the date hereof or the date specified herein, based on information available to us as of such date. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.

Non-GAAP Financial Measures
The Company has included certain non-GAAP financial measures in this release, including Adjusted EBITDA, Transaction Adjusted Capital Expenditures, Transaction Adjusted Capital Expenditures excluding Expansion Capital Expenditures and Free Cash Flow. These terms, as defined herein, are not intended to be considered in isolation, as a substitute for, or superior to, the financial information prepared and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). These terms may vary from the use of similar terms by other companies in our industry due to different methods of calculation and therefore are not necessarily comparable.

We believe that these non-GAAP measures enhance an investor's understanding of our financial performance. We believe that these non-GAAP measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We believe that these non-GAAP measures provide investors with useful information for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake Capital Expenditures. We use these non-GAAP measures for business planning purposes and in measuring our performance relative to that of our competitors. We believe these non-GAAP measures are measures commonly used by investors to evaluate our performance and that of our competitors.

Adjusted EBITDA eliminates the impact of expenses that do not relate to overall business performance and is defined by WOW! as net income (loss) before interest expense, income taxes, depreciation and amortization (including impairments), impairment losses on intangibles and goodwill, management fees to related party, write-off of any asset, loss on early extinguishment of debt, integration and restructuring expenses and all non–cash charges and expenses (including stock compensation expense) and certain other income and expenses. Adjusted EBITDA should not be considered as an alternative to net income (loss), operating income or any other performance measures derived in accordance with GAAP as measures of operating performance, operating cash flows or liquidity.

Transaction Adjusted Capital Expenditures and Transaction Adjusted Capital Expenditures excluding Expansion Capital Expenditures give effect to the reimbursement of Chicago fiber asset build, and exclude the effects associated with Hurricane Michael and should not be considered as an alternative to capital expenditures

Free Cash Flow is defined as Net Cash Provided by Operating Activities less Capital Expenditures. Free Cash Flow presents the cash generated or used by the business in a given period.

Refer to "Reconciliations of GAAP Measures to Non-GAAP Measures" and the accompanying tables below for a reconciliation of Adjusted EBITDA to Net Income, and Net Cash Provided by Operating Activities to Free Cash Flow which are most directly comparable to their corresponding GAAP financial measure.

Subscriber Information
The Company uses the terms defined below throughout this release.

Homes passed are reported as the number of serviceable addresses, such as single residence homes, apartments and condominium units, and businesses passed by our broadband network and listed in our database.

We deliver multiple services to our customers, as such we report Total Subscribers as the number of Subscribers who receive at least one of our HSD, Video or Telephony services, without regard to which or how many services they subscribe. We define each of the individual HSD Subscribers, Video Subscribers and Telephony Subscribers as a Revenue Generating Unit ("RGU").

While we take appropriate steps to ensure subscriber information is presented on a consistent and accurate basis at any given balance sheet date, we periodically review our policies in light of the variability we may encounter across our different markets due to the nature and pricing of products and services and billing systems. Accordingly, we may from time to time make appropriate adjustments to our subscriber information based on such reviews.

 

Unaudited Transaction Adjusted Condensed Consolidated Financial and Subscriber Information
The SEC requires that pro forma financial information be presented in a registrant's periodic filings when events occur for which disclosure would be material to investors, including significant business combinations or the disposition of a significant portion of the business. The significance of an acquired or disposed business is determined based on the "significant subsidiary" tests specified in Regulation S-X, Article 11, Rule 1-02(w). Although the Company has made certain acquisitions and divestitures, such transactions do not meet the "significant subsidiary" tests and, accordingly, the Company's historical financial information as filed with the SEC does not contain pro forma financial information relating to those transactions.

Nevertheless, we make certain adjustments in this release to the historical financial and subscriber information of the Company as filed with the SEC ("Transaction Adjusted") because we believe such information would be meaningful to investors by showing how such transactions might have affected the Company's historical financial statements. The unaudited Transaction Adjusted financial and subscriber information in this release has been prepared giving effect to the divestiture of a portion of our Chicago Fiber Network in December 2017, and the impact of Hurricane Michael in October 2018, as if such transactions had been completed at the beginning of the respective periods presented. The unaudited Transaction Adjusted financial and subscriber information is for informational purposes only and does not purport to represent what our results of operations, financial or subscriber information would have been if such transactions had occurred at any date, nor does such information purport to project the results of operations for any future period.

The unaudited Transaction Adjusted condensed consolidated financial and subscriber information in this release was prepared based on our books and records for the respective periods presented for the portion of the Chicago Fiber Network that was divested, and the impact of Hurricane Michael in October 2018. Such historical unaudited financial and subscriber information has been adjusted to give a Transaction Adjusted effect to events that are directly attributable to such transactions, factually supportable and expected to have a continuing impact on the results. The unaudited Transaction Adjusted financial information herein does not reflect non-recurring charges that have been incurred in connection with the transaction including legal fees, broker fees and accounting fees.

 

Additional Information Available on Website:
The information in this press release should be read in conjunction with the financial statements and footnotes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, which will be posted on of our investor relations website at ir.wowway.com, when it is filed with the Securities and Exchange Commission (the "SEC"). A slide presentation to accompany the conference call and a trending schedule containing historical customer and financial data will also be available on our website.

Contact:
Andrew Posen
Vice President, Head of Investor Relations
303-927-4935
[email protected]

Debra Havins
Senior Director, Corporate Communications
720-527-8214
[email protected]

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SOURCE WideOpenWest, Inc.