Consolidated Communications 8K Announces Third Quarter | CNSL 7 Nov 23

Exhibit 99.1

Consolidated Communications Announces Third Quarter

Financial Results

MATTOON, Ill. – Nov. 7, 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 third quarter of 2023.

Third Quarter 2023 Results

●

Revenue totaled $283.7 million

●

Overall consumer revenue was $115.2 million

●

Consumer fiber revenue was $34.0 million

●

Total consumer broadband net adds were 9,392

●

Consumer broadband revenue was $75.1 million

●

Commercial data services revenue was $53.9 million

●

Carrier data-transport revenue was $31.4 million

●

Other products and services revenue was $10.0 million

●

Net loss was ($69.2 million). Adjusted EBITDA was $80.2 million

●

Total committed capital expenditures were $111.3 million

Operating expenses increased $15.2 million versus the prior year largely due to increased severance costs in relation to the previously announced business simplification and costs savings initiatives, in addition to higher costs related to professional fees for customer service and process improvement initiatives. Partly offsetting the higher operating expenses was the impact of the divestiture of the Kansas City operations on Nov. 30, 2022, lower video programming costs and a decrease in required contributions to the federal and state Universal Service Funds.

Net interest expense was $39.6 million, an increase of $7.5 million versus the prior year, primarily as a result of higher interest on the term loan. The Company has 77% of its total debt at a fixed rate through September 2026. As of Sept. 30, 2023, the weighted average cost of debt was 7.03%.

Net loss in the third quarter of 2023 was ($69.2 million) compared to net income of $282.3 million in the third quarter of 2022, which included $299.9 million of income from discontinued operations. Net loss per share was ($0.61) in the third quarter of 2023 as compared to net income per share of $2.45 in the third 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 ($0.31) compared to ($0.13) in the third quarter of 2022.

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Capital Expenditures

Total committed capital expenditures were $111.3 million, driven by 67,120 new fiber passings and third quarter fiber adds. Capital expenditures were lower than the first two quarters of 2023 due to the usage of existing inventory for install and build activity.

Capital Structure

As of Sept. 30, 2023, the Company maintained liquidity with cash and short-term investments of approximately $90 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net debt leverage ratio for the trailing 12 months ended Sept. 30, 2023, was 6.15x.

In connection with execution of the definitive agreement to be acquired by Searchlight Capital Partners, L.P. (“Searchlight”) and British Columbia Investment Management Corporation (“BCI”), on Oct. 15, 2023 Consolidated entered into an amendment (the “Amendment”) to its credit agreement. The Amendment provides for interim financial covenant relief by increasing the maximum consolidated first lien leverage ratio permitted under the credit agreement, subject to certain conditions. The covenant relief provided for in the Amendment will provide the Company with near-term financial and operational flexibility. The Amendment is expected to remain in effect following closing of the proposed transaction. In the event the proposed transaction does not close by Aug. 1, 2025, it is expected that the maximum consolidated first lien leverage ratio under the financial covenant will revert to the levels that currently apply.

Pending Transaction

As previously announced on Oct. 16, 2023, Consolidated entered into an agreement to be acquired by Searchlight and BCI in an all-cash transaction with an enterprise value of approximately $3.1 billion, including the assumption of debt. The proposed transaction will result in Consolidated becoming a private company and is expected to close by the first quarter of 2025, subject to customary closing conditions, including receipt of regulatory approvals and approval of the holders of a majority of the voting power represented by the outstanding shares that are entitled to vote thereon and held by shareholders other than Searchlight and BCI, their investment fund affiliates and the directors and officers of the Company.

In light of the announced transaction, Consolidated will not host an earnings conference call and has withdrawn its 2023 outlook.

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 60,000 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 includes disclosures regarding “EBITDA,” “adjusted EBITDA,” “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-

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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.

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 “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 Net debt leverage ratio 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, and the timeline for consummating the take private transaction with Searchlight and BCI by the first quarter of 2025, 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

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and incur additional expenses; cyber-attacks may lead to 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; the risk that the proposed transaction may not be completed in a timely manner or at all; the failure to receive, on a timely basis or otherwise, the required approvals of the proposed transaction by the Company’s stockholders; the possibility that any or all of the various conditions to the consummation of the proposed transaction may not be satisfied or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals); the possibility that competing offers or acquisition proposals for the Company will be made; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive transaction agreement relating to the proposed transaction, including in circumstances which would require the Company to pay a termination fee; the effect of the announcement or pendency of the proposed transaction on the Company’s ability to attract, motivate or retain key executives and employees, its ability to maintain relationships with its customers, suppliers and other business counterparties, or its operating results and business generally; risks related to the proposed transaction diverting management’s attention from the Company’s ongoing business operations; the amount of costs, fees and expenses related to the proposed transaction; the risk that the Company’s stock price may decline significantly if the proposed transaction is not consummated; the risk of shareholder litigation in connection with the proposed transaction, including resulting expense or delay; 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 and the other risk factors identified from time to time in the Company’s other filings with the SEC. Filings with the SEC are available on the SEC’s website at http://www.sec.gov. 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.

Participants in the Solicitation

The Company and its directors, executive officers and certain other members of management and employees, under SEC rules, may be deemed to be “participants” in the solicitation of proxies from stockholders of the Company in connection with the proposed transaction. Information about who may, under SEC rules, be considered to be participants in the solicitation of the Company’s stockholders in connection with the proposed transaction will be set forth in the definitive proxy statement when it is filed with the SEC in connection with the proposed transaction. Information relating to the foregoing can also be found in the Company’s Proxy Statement on Schedule 14A for its 2023 Annual Meeting of Shareholders, which was filed with the SEC on March 21, 2023. To the extent holdings of the Company’s securities have changed since the amounts set forth in such 2023 proxy statement, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information concerning the interests of the Company’s participants in the solicitation, which may, in some cases, be different than those of the Company’s stockholders generally, will be set forth in the Company’s proxy statement relating to the proposed transaction when it becomes available.

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Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the proposed acquisition of the Company by Condor Holdings LLC. In connection with the proposed transaction, the Company intends to file relevant materials with the SEC, including the Company’s proxy statement in preliminary and definitive form. In addition, the Company and certain affiliates of the Company intend to jointly file a transaction statement on Schedule 13e-3 (the “Schedule 13e-3”). INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE COMPANY’S PROXY STATEMENT AND THE SCHEDULE 13E-3 (WHEN THEY ARE AVAILABLE), BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE COMPANY, SEARCHLIGHT AND BCI AND THE PROPOSED TRANSACTION. Investors and stockholders of the Company are or will be able to obtain these documents (when they are available) free of charge from the SEC’s website at www.sec.gov, or free of charge from the Company by directing a request to the Company at 2116 South 17th Street, Mattoon, IL 61938, Attention: Investor Relations or at tel: +1 (844) 909-2675.

No Offer or Solicitation

This communication is not intended to and shall not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities, or a solicitation of any vote or approval, nor shall there be any offer, solicitation or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

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

# # #

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Condensed Consolidated Balance Sheets

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

(Unaudited)


	September 30,		December 31,
	2023		2022
ASSETS
Current assets:
Cash and cash equivalents	$	89,617	$	325,852
Short-term investments		—		87,951
Accounts receivable, net		107,361		119,675
Income tax receivable		3,594		1,670
Prepaid expenses and other current assets		51,921		62,996
Assets held for sale		69,816		—
Total current assets		322,309		598,144

Property, plant and equipment, net		2,429,213		2,234,122
Investments		8,980		10,297
Goodwill		814,624		929,570
Customer relationships, net		24,035		43,089
Other intangible assets		10,557		10,557
Other assets		76,245		61,315
Total assets	$	3,685,963	$	3,887,094

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	44,380	$	33,096
Advance billings and customer deposits		44,939		46,664
Accrued compensation		53,896		60,903
Accrued interest		35,623		18,201
Accrued expense		121,016		95,206
Current portion of long-term debt and finance lease obligations		15,540		12,834
Liabilities held for sale		2,727		—
Total current liabilities		318,121		266,904

Long-term debt and finance lease obligations		2,129,087		2,129,462
Deferred income taxes		229,005		274,309
Pension and other post-retirement obligations		118,394		123,644
Other long-term liabilities		46,004		47,326
Total liabilities		2,840,611		2,841,645

Series A Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized, 434,266 and 456,343 shares outstanding as of September 30, 2023 and December 31, 2022, respectively; liquidation preference of $509,646 and $477,047 as of September 30, 2023 and December 31, 2022, respectively		361,276		328,680

Shareholders' equity:
Common stock, par value $0.01 per share; 150,000,000 shares authorized, 116,487,985 and 115,167,193 shares outstanding as of September 30, 2023 and December 31, 2022, respectively		1,165		1,152
Additional paid-in capital		692,197		720,442
Accumulated deficit		(215,080)		(11,866)
Accumulated other comprehensive loss, net		(2,298)		(610)
Noncontrolling interest		8,092		7,651
Total shareholders' equity		484,076		716,769
Total liabilities, mezzanine equity and shareholders' equity	$	3,685,963	$	3,887,094

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Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Operations

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022

Net revenues	$	283,654	$	296,619	$	834,942	$	895,287
Operating expenses:
Cost of services and products		132,422		141,226		391,327		413,009
Selling, general and administrative expenses		96,814		72,837		261,663		221,632
Loss on impairment of assets held for sale		—		5,208		77,755		131,698
Loss (gain) on disposal of assets		6,692		(19,163)		12,380		(19,163)
Depreciation and amortization		79,604		75,659		236,841		220,552
Income (loss) from operations		(31,878)		20,852		(145,024)		(72,441)
Other income (expense):
Interest expense, net of interest income		(39,571)		(32,071)		(110,334)		(91,742)
Other income, net		3,509		2,984		11,677		9,425
Loss from continuing operations before income taxes		(67,940)		(8,235)		(243,681)		(154,758)
Income tax benefit		(10,220)		(978)		(40,908)		(17,814)
Loss from continuing operations		(57,720)		(7,257)		(202,773)		(136,944)

Discontinued operations:
Income from discontinued operations		—		4,744		—		22,628
Gain on sale of discontinued operations		—		389,905		—		389,905
Income tax expense		—		94,715		—		99,973
Income from discontinued operations		—		299,934		—		312,560

Net income (loss)		(57,720)		292,677		(202,773)		175,616
Less: dividends on Series A preferred stock		11,305		10,352		32,596		29,752
Less: net income attributable to noncontrolling interest		137		75		441		393
Net income (loss) attributable to common shareholders	$	(69,162)	$	282,250	$	(235,810)	$	145,471

Net income (loss) per common share - basic and diluted:
Loss from continuing operations	$	(0.61)	$	(0.15)	$	(2.09)	$	(1.45)
Income from discontinued operations		—		2.60		—		2.72
Net income (loss) per basic and diluted common shares attributable to common shareholders	$	(0.61)	$	2.45	$	(2.09)	$	1.27

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Consolidated Communications Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
OPERATING ACTIVITIES
Net income (loss)	$	(57,720)	$	292,677	$	(202,773)	$	175,616
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		79,604		75,659		236,841		220,552
Deferred income taxes		(13,438)		81,775		(44,697)		69,949
Cash distributions from wireless partnerships in excess of earnings		—		3,957		—		5,618
Pension and post-retirement contributions in excess of expense		(3,704)		(4,830)		(9,241)		(23,991)
Non-cash, stock-based compensation		2,261		2,939		5,448		7,971
Amortization of deferred financing costs and discounts		1,901		1,849		5,622		5,475
Loss on impairment of assets held for sale		—		5,208		77,755		131,698
Gain on sale of partnership interests		—		(389,905)		—		(389,905)
Loss (gain) on disposal of assets		6,692		(19,163)		12,380		(19,163)
Other adjustments, net		614		(162)		(2,247)		(558)
Changes in operating assets and liabilities, net		19,064		26,622		23,505		34,869
Net cash provided by operating activities		35,274		76,626		102,593		218,131
INVESTING ACTIVITIES
Purchase of property, plant and equipment, net		(143,337)		(164,045)		(424,197)		(496,959)
Purchase of investments		—		—		—		(39,959)
Proceeds (disbursements) from sale of assets		(712)		19,463		6,089		21,257
Proceeds from business dispositions, net		—		—		—		26,042
Proceeds from sale and maturity of investments		—		25,006		91,623		151,560
Proceeds from sale of partnership interests, net		—		489,567		—		489,567
Net cash provided by (used in) investing activities		(144,049)		369,991		(326,485)		151,508
FINANCING ACTIVITIES
Payment of finance lease obligations		(4,138)		(2,587)		(11,259)		(7,111)
Share repurchases for minimum tax withholding		(48)		—		(1,084)		(114)
Net cash used in financing activities		(4,186)		(2,587)		(12,343)		(7,225)
Net change in cash and cash equivalents		(112,961)		444,030		(236,235)		362,414
Cash and cash equivalents at beginning of period		202,578		18,019		325,852		99,635
Cash and cash equivalents at end of period	$	89,617	$	462,049	$	89,617	$	462,049

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Consolidated Communications Holdings, Inc.

Consolidated Revenue by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Consumer:
Broadband (Data and VoIP)	$	75,089	$	69,641	$	214,389	$	203,144
Voice services		31,616		36,444		95,231		110,539
Video services		8,541		13,552		27,497		42,277
		115,246		119,637		337,117		355,960
Commercial:
Data services (includes VoIP)		53,870		56,796		160,234		171,804
Voice services		31,825		35,484		96,692		107,598
Other		9,228		9,933		29,362		32,780
		94,923		102,213		286,288		312,182
Carrier:
Data and transport services		31,388		33,878		95,535		103,626
Voice services		4,090		3,517		12,720		11,087
Other		262		605		925		1,350
		35,740		38,000		109,180		116,063

Subsidies		6,878		7,187		20,986		20,304
Network access		20,842		27,277		68,033		78,336
Other products and services		10,025		2,305		13,338		12,442
Total operating revenue	$	283,654	$	296,619	$	834,942	$	895,287

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Consolidated Communications Holdings, Inc.

Consolidated Revenue Trend by Category

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	Q3 2023		Q2 2023		Q1 2023		Q4 2022		Q3 2022
Consumer:
Broadband (Data and VoIP)	$	75,089	$	71,339	$	67,961	$	69,002	$	69,641
Voice services		31,616		31,352		32,263		34,314		36,444
Video services		8,541		9,362		9,594		11,876		13,552
		115,246		112,053		109,818		115,192		119,637
Commercial:
Data services (includes VoIP)		53,870		53,230		53,134		56,662		56,796
Voice services		31,825		32,236		32,631		34,676		35,484
Other		9,228		10,378		9,756		10,320		9,933
		94,923		95,844		95,521		101,658		102,213
Carrier:
Data and transport services		31,388		31,224		32,923		33,752		33,878
Voice services		4,090		4,263		4,367		3,685		3,517
Other		262		313		350		338		605
		35,740		35,800		37,640		37,775		38,000

Subsidies		6,878		7,072		7,036		13,078		7,187
Network access		20,842		22,747		24,444		26,308		27,277
Other products and services		10,025		1,646		1,667		1,965		2,305
Total operating revenue	$	283,654	$	275,162	$	276,126	$	295,976	$	296,619

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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						Nine Months Ended
	September 30, 2022						September 30, 2022
	Historical		Adjustments⁽¹⁾		Normalized		Historical		Adjustments⁽¹⁾		Normalized
Consumer:
Broadband (Data and VoIP)	$	69,641	$	(1,745)	$	67,896	$	203,144	$	(5,581)	$	197,563
Voice services		36,444		(514)		35,930		110,539		(1,751)		108,788
Video services		13,552		(2,599)		10,953		42,277		(8,005)		34,272
		119,637		(4,858)		114,779		355,960		(15,337)		340,623
Commercial:
Data services (includes VoIP)		56,796		(4,034)		52,762		171,804		(12,403)		159,401
Voice services		35,484		(1,253)		34,231		107,598		(4,045)		103,553
Other		9,933		(273)		9,660		32,780		(860)		31,920
		102,213		(5,560)		96,653		312,182		(17,308)		294,874
Carrier:
Data and transport services		33,878		(283)		33,595		103,626		(3,923)		99,703
Voice services		3,517		(4)		3,513		11,087		(13)		11,074
Other		605		(5)		600		1,350		(8)		1,342
		38,000		(292)		37,708		116,063		(3,944)		112,119

Subsidies		7,187		—		7,187		20,304		(49)		20,255
Network access		27,277		(474)		26,803		78,336		(1,412)		76,924
Other products and services		2,305		(181)		2,124		12,442		(368)		12,074
Total operating revenue	$	296,619	$	(11,365)	$	285,254	$	895,287	$	(38,418)	$	856,869

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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Loss from continuing operations	$	(57,720)	$	(7,257)	$	(202,773)	$	(136,944)
Add (subtract):
Income tax benefit		(10,220)		(978)		(40,908)		(17,814)
Interest expense, net		39,571		32,071		110,334		91,742
Depreciation and amortization		79,604		75,659		236,841		220,552
EBITDA		51,235		99,495		103,494		157,536

Adjustments to EBITDA (1):
Other, net (2)		21,366		6,186		36,837		17,754
Pension/OPEB benefit		(1,323)		(2,950)		(3,395)		(8,897)
Loss (gain) on disposal of assets		6,692		(19,163)		12,380		(19,163)
Loss on impairment		—		5,208		77,755		131,698
Non-cash compensation (3)		2,261		2,939		5,448		7,971
Adjusted EBITDA from continuing operations		80,231		91,715		232,519		286,899
Investment distributions from discontinued operations		—		5,478		—		25,023
Adjusted EBITDA	$	80,231	$	97,193	$	232,519	$	311,922

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 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				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Loss from continuing operations	$	(57,720)	$	(7,257)	$	(202,773)	$	(136,944)
Less: dividends on Series A preferred stock		11,305		10,352		32,596		29,752
Less: net income attributable to noncontrolling interest		137		75		441		393
Loss attributable to common shareholders from continuing operations		(69,162)		(17,684)		(235,810)		(167,089)

Adjustments to loss attributable to common shareholders:
Dividends on Series A preferred stock		11,305		10,352		32,596		29,752
Integration and severance related costs, net of tax		13,099		—		17,062		1,604
Loss on impairment of assets held for sale		—		5,208		77,755		131,698
Loss on disposition of assets, net of tax		4,943		—		9,145		—
Gain on disposition of tower assets, net of tax		—		(14,167)		—		(14,167)
Non-cash interest expense for swaps, net of tax		(101)		(328)		(732)		(932)
Tax impact of non-deductible goodwill		3,283		821		(2,618)		(11,118)
Change in deferred tax rate		—		(644)		—		(644)
Non-cash stock compensation, net of tax		1,670		2,173		4,024		5,893
Adjusted net loss from continuing operations	$	(34,963)	$	(14,269)	$	(98,578)	$	(25,003)

Weighted average number of common shares outstanding		113,054		111,697		113,015		111,695

Adjusted diluted net income (loss) per common share:
Adjusted net loss from continuing operations	$	(0.31)	$	(0.13)	$	(0.87)	$	(0.22)
Adjusted income from discontinued operations excluding gain on sale of partnership interests, net of tax		—		0.04		—		0.15
	$	(0.31)	$	(0.09)	$	(0.87)	$	(0.07)

Notes:

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

Page 13 of 16

Consolidated Communications Holdings, Inc.

Reconciliation of Total Net Debt to LTM Adjusted EBITDA Ratio

(Dollars in thousands)

(Unaudited)


	September 30,
	2023
Long-term debt and finance lease obligations:
Term loans, net of discount $7,445	$	992,430
6.50% Senior secured notes due 2028		750,000
5.00% Senior secured notes due 2028		400,000
Finance leases		32,455
Total debt as of September 30, 2023		2,174,885
Less: deferred debt issuance costs		(30,258)
Less: cash, cash equivalents and short-term investments		(89,617)
Total net debt as of September 30, 2023	$	2,055,010

Adjusted EBITDA for the 12 months ended September 30, 2023	$	334,177

Total Net Debt to last 12 months Adjusted EBITDA		6.15x

Page 14 of 16

Consolidated Communications Holdings, Inc.

Key Operating Metrics

(Unaudited)


	2022										2023
	Q1		Q2		Q3		Q4		FY		Q1		Q2		Q3
Passings
Total Fiber Gig+ Capable Passings ^(1)(5)(6)		689,406		831,779		947,974		1,008,660		1,008,660		1,062,518		1,119,956		1,187,076
Total DSL/Copper Passings ^(2)(3)(5)(6)		2,059,025		1,920,214		1,807,381		1,617,077		1,617,077		1,564,889		1,509,875		1,447,539
Total Passings ^{(1)(2)(3)(5)(6)}		2,748,431		2,751,993		2,755,355		2,625,737		2,625,737		2,627,407		2,629,831		2,634,615
% Fiber Gig+ Coverage/Total Passings		25%		30%		34%		38%		38%		40%		43%		45%

Consumer Broadband Connections
Fiber Gig+ Capable ⁽³⁾		93,812		103,455		115,598		122,872		122,872		135,209		153,860		175,748
DSL/Copper ⁽²⁾⁽³⁾		286,338		277,758		266,314		244,586		244,586		234,653		222,969		210,473
Total Consumer Broadband Connections⁽²⁾⁽³⁾		380,150		381,213		381,912		367,458		367,458		369,862		376,829		386,221

Consumer Broadband Net Adds
Total Fiber Gig+ Capable Net Adds⁽⁷⁾		7,690		9,643		12,143		10,599		40,075		12,337		18,651		21,888
DSL/Copper Net Adds ⁽⁷⁾		(8,544)		(8,580)		(11,444)		(10,783)		(39,351)		(9,933)		(11,684)		(12,496)
Total Consumer Broadband Net Adds ⁽⁷⁾		(854)		1,063		699		(184)		724		2,404		6,967		9,392

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

Consumer Average Revenue Per Unit (ARPU)
Fiber Gig+ Capable	$	63.88	$	64.95	$	65.61	$	67.14	$	65.42	$	67.51	$	68.29	$	68.78
DSL/Copper	$	50.78	$	52.36	$	53.87	$	53.55	$	53.36	$	53.21	$	55.88	$	57.18

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

Consumer Broadband Revenue ($ in thousands)
Fiber Broadband Revenue ⁽⁴⁾	$	17,242	$	19,218	$	21,558	$	24,016	$	82,034	$	26,136	$	29,613	$	34,004
Copper and Other Broadband Revenue		48,669		48,374		48,083		44,986		190,112		41,825		41,726		41,085
Total Consumer Broadband Revenue	$	65,911	$	67,592	$	69,641	$	69,002	$	272,146	$	67,961	$	71,339	$	75,089

Consumer Voice Connections⁽³⁾		316,634		306,458		294,441		276,779		276,779		267,509		258,680		249,081

Video Connections ⁽³⁾		58,812		55,225		51,339		35,039		35,039		32,426		28,934		26,158

Fiber route network miles (long-haul, metro and FttP)		54,239		56,093		57,498		57,865		57,865		57,569		58,836		59,915

On-net buildings ⁽³⁾		15,446		15,618		15,715		14,427		14,427		14,520		14,735		14,928

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 September 30, 2023, 178,416 of the targeted 222,000 passings for 2023 were upgraded to FttP and total fiber passings were ~1,187,076 or 45% 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.

(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, 2022 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

Consolidated Communications (CNSL) 8-KConsolidated Communications Announces Third Quarter