Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier”)
reported third-quarter 2024 results today.
Third-Quarter 2024 Highlights
- Added 381,000 fiber passings to reach 7.6 million total
locations passed with fiber
- Added 108,000 fiber broadband customers, resulting in fiber
broadband customer growth of 19.3% year-over-year
- Consumer fiber broadband ARPU of $65.40, up 1.4%
year-over-year
- Revenue of $1.49 billion increased 3.7% year-over-year as
growth in fiber-based products was partly offset by declines in
copper-based products
- Operating income of $86 million and net loss of $82
million
- Adjusted EBITDA of $549 million increased 4.4% year-over-year
driven by revenue growth and lower costs of service that were
partly offset by higher customer acquisition costs1
- Total cash capital expenditures of $699 million
- Generated net cash from operations of $618 million
Third-Quarter 2024 Consumer Results
- Consumer revenue of $789 million increased 0.3% year-over-year
as growth in fiber was partly offset by declines in copper
- Consumer fiber revenue of $537 million increased 12.1%
year-over-year as growth in broadband was partly offset by declines
in video and voice
- Consumer fiber broadband revenue of $414 million increased
21.8% year-over-year driven by growth in both fiber broadband
customers and ARPU
- Consumer fiber broadband customer net additions of 104,000
resulted in consumer fiber broadband customer growth of 20.0%
year-over-year
- Consumer fiber broadband customer churn of 1.49% compared to
1.47% in the third quarter of 2023
Third-Quarter 2024 Business and Wholesale Results
- Business and Wholesale revenue of $682 million increased 7.6%
year-over-year as growth in fiber was partly offset by declines in
copper
- Business and Wholesale fiber revenue of $330 million increased
17.4% year-over-year driven by growth in data and internet
services
- Business and Wholesale fiber broadband customer net additions
of 4,000 resulted in Business and Wholesale fiber broadband
customer growth of 9.5% year-over-year
- Business and Wholesale fiber broadband customer churn of 1.50%
compared to 1.24% in the third quarter of 20232
- Business and Wholesale fiber broadband ARPU of $98.71 increased
0.2% year-over-year2
Capital Structure
As of September 30, 2024, Frontier had total liquidity of $2.0
billion, including a cash balance of approximately $1.3 billion,
and approximately $0.7 billion of available borrowing capacity on
its revolving credit facility. Frontier’s net leverage ratio on
September 30, 2024, was approximately 4.6x3. Frontier has no
long-term debt maturities prior to 2027.
Pending Acquisition by Verizon
As previously announced, on September 4, 2024, Verizon
Communications Inc. (“Verizon”) and Frontier Communications Parent,
Inc. entered into a definitive agreement (the “merger agreement”)
for Verizon to acquire Frontier (the “transaction”). In connection
with the proposed transaction, Frontier filed a definitive proxy
statement with the U.S. Securities and Exchange Commission (the
“SEC”) and will hold a related special meeting of stockholders on
November 13, 2024. Frontier’s Board of Directors continues to
believe the transaction with Verizon at $38.50 per share is the
best outcome for stockholders and strongly recommends stockholders
vote “FOR” the transaction on November 13. For additional
information, please reference our stockholder presentation
here.
The transaction is expected to close by the first quarter of
2026, subject to receipt of requisite approval from Frontier’s
stockholders and certain required regulatory approvals, and the
satisfaction or waiver of the other conditions to the transaction
described in the merger agreement.
Due to the pending transaction, Frontier will not host a
conference call to review the third quarter or provide a financial
outlook.
1 Adjusted EBITDA is a non-GAAP measure of performance. See
“Non-GAAP Measures” for a description of this measure and its
calculation. See Schedule A for a reconciliation of Adjusted EBITDA
to net loss. 2 Business and Wholesale churn and ARPU methodologies
exclude circuits or fiber-to-the-tower churn. 3 Net leverage ratio
is a non-GAAP measure. See “Non-GAAP Measures” and the condensed
consolidated balance sheet data contained herein for a description
and calculation of net leverage ratio.
About Frontier
Frontier (NASDAQ: FYBR) is the largest pure-play fiber provider
in the U.S. Driven by our purpose, Building Gigabit America®, we
deliver blazing-fast broadband connectivity that unlocks the
potential of millions of consumers and businesses. For more
information, visit www.frontier.com.
Non-GAAP Financial Measures
Frontier uses certain non-GAAP financial measures in evaluating
its performance, including EBITDA, EBITDA margin, Adjusted EBITDA,
Adjusted EBITDA margin, operating free cash flow, adjusted
operating expenses, and net leverage ratio, each of which is
described below. Management uses these non-GAAP financial measures
internally to (i) assist in analyzing Frontier's underlying
financial performance from period to period, (ii) analyze and
evaluate strategic and operational decisions, (iii) establish
criteria for compensation decisions, and (iv) assist in the
understanding of Frontier's ability to generate cash flow and, as a
result, to plan for future capital and operational decisions.
Management believes that the presentation of these non-GAAP
financial measures provides useful information to investors
regarding Frontier’s financial condition and results of operations
because these measures, when used in conjunction with related GAAP
financial measures, (i) provide a more comprehensive view of
Frontier’s core operations and ability to generate cash flow, (ii)
provide investors with the financial analytical framework upon
which management bases financial, operational, compensation, and
planning decisions, and (iii) present measurements that investors
and rating agencies have indicated to management are useful to them
in assessing Frontier and its results of operations.
A reconciliation of these measures to the most comparable
financial measures calculated and presented in accordance with GAAP
is included in the accompanying tables. These non-GAAP financial
measures are not measures of financial performance or liquidity
under GAAP, nor are they alternatives to GAAP measures, and they
may not be comparable to similarly titled measures of other
companies.
EBITDA is defined as net income (loss) less income tax expense
(benefit), interest expense, investment and other income (loss),
pension settlement costs, reorganization items, and depreciation
and amortization. EBITDA margin is calculated by dividing EBITDA by
total revenue.
Adjusted EBITDA is defined as EBITDA, as described above,
adjusted to exclude certain pension/OPEB expenses, restructuring
costs and other charges, stock-based compensation, and certain
other non-recurring items. Adjusted EBITDA margin is calculated by
dividing Adjusted EBITDA by total revenue.
Management uses EBITDA, EBITDA margin, Adjusted EBITDA and
Adjusted EBITDA margin to assist it in comparing performance from
period to period and as measures of operational performance.
Management believes that these non-GAAP measures provide useful
information for investors in evaluating Frontier’s operational
performance from period to period because they exclude depreciation
and amortization expenses related to investments made in prior
periods and are determined without regard to capital structure or
investment activities. By excluding capital expenditures, debt
repayments and dividends, among other factors, these non-GAAP
financial measures have certain shortcomings. Management
compensates for these shortcomings by utilizing these non-GAAP
financial measures in conjunction with the comparable GAAP
financial measures.
Management defines operating free cash flow as net cash provided
from operating activities less capital expenditures, less payments
on vendor financing related to capital expenditures. Management
uses operating free cash flow to assist it in comparing liquidity
from period to period and to obtain a more comprehensive view of
Frontier’s core operations and ability to generate cash flow.
Management believes that this non-GAAP measure is useful to
investors in evaluating cash available to service debt and pay
dividends. This non-GAAP financial measure has certain
shortcomings; it does not represent the residual cash flow
available for discretionary expenditures, as items such as debt
repayments are not deducted in determining such measure. Management
compensates for these shortcomings by utilizing this non-GAAP
financial measure in conjunction with the comparable GAAP financial
measure.
Adjusted operating expenses is defined as operating expenses
adjusted to exclude depreciation and amortization, restructuring
and other charges, certain pension/OPEB expenses, stock-based
compensation, and certain other non-recurring items. Investors have
indicated that this non-GAAP measure is useful in evaluating
Frontier’s performance.
Net leverage ratio is calculated as net debt (total debt less
cash and cash equivalents and short-term investments) divided by
Adjusted EBITDA for the most recent four quarters. Investors have
indicated that this non-GAAP measure is useful in evaluating
Frontier’s debt levels.
The information in this press release should be read in
conjunction with the financial statements and footnotes contained
in Frontier’s documents filed with the SEC.
Forward-Looking Statements
This release contains "forward-looking statements" related to
future events. Forward-looking statements address our expectations
or beliefs concerning future events, including, without limitation,
future operating and financial performance, our ability to
implement our growth strategy our ability to comply with the
covenants in the agreements governing our indebtedness, our capital
expenditures, and other matters. These statements are made on the
basis of management’s views and assumptions, as of the time the
statements are made, regarding future events and performance and
contain words such as “expect,” “anticipate,” “intend,” “plan,”
“believe,” “seek,” “see,” “may,” “will,” “would,” or “target.”
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain. A wide range of factors could
materially affect future developments and performance, including
but not limited to: our significant indebtedness, our ability to
incur substantially more debt in the future, and covenants in the
agreements governing our current indebtedness that may reduce our
operating and financial flexibility; declines in Adjusted EBITDA
and revenue relative to historical levels that we are unable to
offset; economic uncertainty, volatility in financial markets, and
rising interest rates could limit our ability to access capital or
increase the cost of capital needed to fund business operations,
including our fiber expansion plans; our ability to successfully
implement strategic initiatives, including our fiber buildout and
other initiatives to enhance revenue and realize productivity
improvements; our ability to secure necessary construction
resources, materials and permits for our fiber buildout initiative
in a timely and cost-effective manner; inflationary pressures on
costs, including tight labor markets, increased fuel and
electricity costs and potential disruptions in our supply chain,
which could adversely impact our financial condition or results of
operations and hinder our fiber expansion plans; our ability to
effectively manage our operations, operating expenses, capital
expenditures, debt service requirements and cash paid for income
taxes and liquidity; the impact of potential information technology
or data security breaches or other cyber-attacks or other
disruptions; the impact of laws and regulations relating to the
handling of privacy and data protection; competition from cable,
wireless carriers, satellite providers, wireline carriers, fiber
“overbuilders” and over the top companies, and the risk that we
will not respond on a timely or profitable basis; our ability to
successfully adjust to changes in the communications industry,
including the effects of technological changes and competition on
our capital expenditures, products and service offerings; our
ability to retain or attract new customers and to maintain
relationships with existing customers, including wholesale
customers; our reliance on a limited number of key supplies and
vendors; declines in revenue from our voice services, switched and
nonswitched access and video and data services that we cannot
stabilize or offset with increases in revenue from other products
and services; our ability to secure, continue to use or renew
intellectual property and other licenses used in our business; our
ability to hire or retain key personnel; our ability to dispose of
certain assets or asset groups or to make acquisition of certain
assets on terms that are attractive to us, or at all; the effects
of changes in the availability of federal and state universal
service funding or other subsidies to us and our competitors and
our ability to obtain future subsidies; our ability to comply with
the applicable CAF II and RDOF requirements and the risk of
penalties or obligations to return certain CAF II and RDOF funds;
our ability to defend against litigation or government
investigations and potentially unfavorable results from current
pending and future litigation or investigations; our ability to
comply with applicable federal and state consumer protection
requirements; the effects of governmental legislation and
regulation on our business, including costs, disruptions, possible
limitations on operating flexibility and changes to the competitive
landscape resulting from such legislation or regulation; the impact
of regulatory, investigative and legal proceedings and legal
compliance risks; our ability to effectively manage service quality
in the states in which we operate and meet mandated service quality
metrics or regulatory requirements; the effects of changes in
income tax rates, tax laws, regulations or rulings, or federal or
state tax assessments, including the risk that such changes may
benefit our competitors more than us, as well as potential future
decreases in the value of our deferred tax assets; the effects of
changes in accounting policies or practices; our ability to
successfully renegotiate union contracts; the effects of increased
medical expenses and pension and postemployment expenses; changes
in pension plan assumptions, interest rates, discount rates,
regulatory rules and/or the value of our pension plan assets; the
impact of adverse changes in economic, political and market
conditions in the areas that we serve, the U.S. and globally,
including but not limited to, disruption in our supply chain,
inflation in pricing for key materials or labor, or other adverse
changes resulting from epidemics, pandemics and outbreaks of
contagious diseases, natural disasters, economic or political
instability, terrorist attacks and wars, including the ongoing war
in Ukraine and the Israel-Hamas war, or other adverse widespread
developments; potential adverse impacts of climate change and
increasingly stringent environmental laws, rules and regulations,
and customer expectations and other environmental liabilities;
market overhang due to substantial common stock holdings by our
former creditors; certain provisions of Delaware law and our
certificate of incorporation that may prevent efforts by our
stockholders to change the direction or management of our company;
the risk that the proposed transaction with Verizon may not be
completed in a timely manner or at all; the failure to receive, on
a timely basis or otherwise, the required approval of the proposed
transaction by Frontier’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 Frontier will be
made; the occurrence of any event, change or other circumstance
that could give rise to the termination of the merger agreement
relating to the proposed transaction, including in circumstances
which would require Frontier to pay a termination fee to Verizon;
the effect of the announcement or pendency of the proposed
transaction on Frontier’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
Frontier’s ongoing business operations; the amount of costs, fees
and expenses related to the proposed transaction; the risk that
Frontier’s stock price may decline significantly if the transaction
is not consummated; the risk of shareholder litigation in
connection with the proposed transaction, including resulting
expense or delay; and certain other factors set forth in our other
filings with the SEC. This list of factors that may affect future
performance and the accuracy of forward-looking statements is
illustrative and is not intended to be exhaustive. You should
consider these important factors, as well as the risks and other
factors contained in Frontier’s filings with the SEC, including our
most recent reports on Form 10-K and Form 10-Q. These risks and
uncertainties may cause actual future results to be materially
different than those expressed in such forward-looking statements.
We do not intend, nor do we undertake any duty, to update any
forward-looking statements.
Participants in the Solicitation
Frontier and Frontier’s directors, executive officers and other
members of management and employees, under SEC rules, may be deemed
to be participants in the solicitation of proxies from the
stockholders of Frontier in connection with the proposed
transactions. Information about Frontier’s directors and executive
officers is set forth in the Frontier Proxy Statement on Schedule
14A for its 2024 Annual Meeting of Shareholders, which was filed
with the SEC on April 3, 2024. To the extent holdings of Frontier’s
securities by its directors or executives officers have changed
since the amounts set forth in such 2024 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, including the Form 4s filed by: John
Harrobin on May 7, 2024; William McGloin on May 7, 2024 and June
21, 2024; Scott C. Beasley on May 7, 2024; Mark D. Nielsen on May
7, 2024; John G. Stratton on May 7, 2024; Veronica Bloodworth on
May 7, 2024; Alan Gardner on May 7, 2024; Maryann Turcke on May 30,
2024; Kevin L. Beebe on May 30, 2024; George Haywood Young III on
May 30, 2024; Pamela L. Coe on May 30, 2024; Lisa Chang on May 30,
2024; Stephen Charles Pusey on May 30, 2024; Pratabkumar Vemana on
May 30, 2024; and Margaret Mary Smyth on May 30, 2024. Additional
information regarding the identity of potential participants, and
their direct or indirect interests, by security holdings or
otherwise, is included in Frontier’s definitive proxy statement
relating to the proposed transactions, which was filed with the SEC
on October 7, 2024. These documents may be obtained free of charge
from the SEC’s website at www.sec.gov or Frontier’s website at
investor.frontier.com.
Important Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of Frontier by Verizon. In
connection with the proposed transaction, on October 7, 2024,
Frontier filed a definitive proxy statement with the SEC. INVESTORS
AND STOCKHOLDERS OF FRONTIER ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING FRONTIER’S PROXY STATEMENT,
BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
THE PROPOSED TRANSACTION. Investors and stockholders are or will be
able to obtain the documents free of charge either from the SEC’s
website at www.sec.gov or from Frontier’s Investor Relations
website at investor.frontier.com or by contacting Frontier’s
Investor Relations by e-mail at ir@ftr.com.
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. No offer of securities
shall be made in the United States absent registration under the
U.S. Securities Act of 1933, as amended, or pursuant to an
exemption from, or in a transaction not subject to, such
registration requirements.
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the
For the
For the
three months ended
three months ended
three months ended
September 30,
June 30,
September 30,
($ in millions and
shares in thousands, except per share amounts)
2024
2024
2023
Statements of Operations Data
Revenue
$
1,489
$
1,480
$
1,436
Operating expenses:
Cost of service
538
516
545
Selling, general, and administrative
expenses
427
449
405
Depreciation and amortization
410
398
356
Restructuring costs and other charges
28
26
16
Total operating expenses
1,403
1,389
1,322
Operating income
86
91
114
Investment and other income (loss),
net
29
(24)
67
Interest expense
(203)
(199)
(170)
Income (loss) before income taxes
(88)
(132)
11
Income tax benefit
(6)
(9)
-
Net income (loss)
$
(82)
$
(123)
$
11
Weighted average shares outstanding -
basic
248,986
248,754
245,761
Weighted average shares outstanding -
diluted
248,986
248,754
247,447
Basic net earnings (loss) per common
share
$
(0.33)
$
(0.49)
$
0.05
Diluted net earnings (loss) per common
share
$
(0.33)
$
(0.49)
$
0.05
Other Financial Data:
Capital expenditures
$
699
$
626
$
671
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the
For the
nine months ended
nine months ended
September 30,
September 30,
($ in millions and
shares in thousands, except per share amounts)
2024
2023
Statements of Income Data
Revenue
$
4,431
$
4,325
Operating expenses:
Cost of service
1,576
1,615
Selling, general, and administrative
expenses
1,304
1,250
Depreciation and amortization
1,196
1,040
Restructuring costs and other charges
88
48
Total operating expenses
4,164
3,953
Operating income
267
372
Investment and other income, net
117
101
Interest expense
(601)
(460)
Income (loss) before income taxes
(217)
13
Income tax expense (benefit)
(13)
1
Net income (loss)
$
(204)
$
12
Weighted average shares outstanding -
basic
247,866
245,431
Weighted average shares outstanding -
diluted
247,866
247,336
Basic net earnings (loss) per common
share
$
(0.82)
$
0.05
Diluted net earnings (loss) per common
share
$
(0.82)
$
0.05
Other Financial Data:
Capital expenditures
$
1,991
$
2,882
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the quarter ended
September 30,
June 30,
September 30,
($ in
millions)
2024
2024
2023
Selected Statement of Income
Data
Revenue:
Data and Internet services
$
1,004
$
983
$
895
Voice services
301
312
341
Video services
83
88
104
Other
83
83
81
Revenue from contracts with customers
1,471
1,466
1,421
Subsidy and other revenue
18
14
15
Total revenue
$
1,489
$
1,480
$
1,436
Other Financial Data
Revenue:
Consumer
$
789
$
789
$
787
Business and wholesale
682
677
634
Revenue from contracts with customers
$
1,471
$
1,466
$
1,421
Fiber
$
867
$
840
$
760
Copper
604
626
661
Revenue from contracts with customers
$
1,471
$
1,466
$
1,421
For the nine months
ended
For the nine months
ended
September 30,
September 30,
($ in
millions)
2024
2023
Selected Statement of Income
Data
Revenue:
Data and Internet services
$
2,934
$
2,637
Voice services
934
1,044
Video services
265
333
Other
250
253
Revenue from contracts with customers
4,383
4,267
Subsidy and other revenue
48
58
Total revenue
$
4,431
$
4,325
Other Financial Data
Revenue:
Consumer
$
2,365
$
2,323
Business and wholesale
2,018
1,944
Revenue from contracts with customers
$
4,383
$
4,267
Fiber
$
2,512
$
2,235
Copper
1,871
2,032
Revenue from contracts with customers
$
4,383
$
4,267
Frontier Communications
Parent, Inc.
Unaudited Operating
Data
As of and for the three months
ended
For the nine months
ended
September 30, 2024
June 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Broadband customer metrics (1)
Broadband customers (in thousands)
3,057
3,010
2,913
3,057
2,913
Net customer additions
47
36
15
114
45
Consumer customer metrics
Customers (in thousands)
3,176
3,154
3,118
3,176
3,118
Net customer additions (losses)
22
14
(9)
47
(15)
Average monthly consumer
revenue per customer
$
83.12
$
83.57
$
83.99
$
83.51
$
82.49
Customer monthly churn
1.80%
1.65%
1.70%
1.64%
1.55%
Employees
12,950
12,960
13,756
12,950
13,756
(1) Amounts presented include related
metrics for our wholesale customers.
Frontier Communications
Parent, Inc.
Condensed Consolidated Balance
Sheet Data
(Unaudited)
($ in
millions)
September 30, 2024
December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
1,320
$
1,125
Short-term investments
-
1,075
Accounts receivable, net
419
446
Other current assets
147
135
Total current assets
1,886
2,781
Property, plant and equipment, net
15,226
13,933
Other assets
3,747
3,979
Total assets
$
20,859
$
20,693
LIABILITIES AND
EQUITY
Current liabilities:
Long-term debt due within one year
$
10
$
15
Accounts payable and other current
liabilities
2,443
2,260
Total current liabilities
2,453
2,275
Deferred income taxes and other
liabilities
1,784
1,893
Long-term debt
11,556
11,246
Equity
5,066
5,279
Total liabilities and equity
$
20,859
$
20,693
As of
September 30, 2024
Leverage
Ratio
Numerator:
Long-term debt due within one year
$
10
Long-term debt
11,556
Total debt
$
11,566
Less: Cash and cash equivalents
(1,320)
Net debt
$
10,246
Denominator:
Adjusted EBITDA - last 4 quarters
$
2,205
Net Leverage Ratio
4.6x
Frontier Communications
Parent, Inc.
Unaudited Consolidated Cash
Flow Data
For the three months
ended
September 30, 2024
September 30, 2023
($ in
millions)
Cash flows provided from (used by)
operating activities:
Net income (loss)
$
(82)
$
11
Adjustments to reconcile net loss to net
cash provided from
(used by) operating activities:
Depreciation and amortization
410
356
Pension/OPEB special termination benefit
enhancements
1
-
Stock-based compensation
17
30
Amortization of premium
(5)
(6)
Bad debt expense
10
8
Other adjustments
3
7
Deferred income taxes
(8)
(1)
Change in accounts receivable
5
(26)
Change in long-term pension and other
postretirement liabilities
(38)
(98)
Change in accounts payable and other
liabilities
316
113
Change in prepaid expenses, income taxes,
and other assets
(11)
(11)
Net cash provided from operating
activities
618
383
Cash flows provided from (used by)
investing activities:
Capital expenditures
(699)
(671)
Purchases of short-term investments
(1)
-
(1,275)
Sale of short-term investments (1)
-
575
Purchases of long-term investments
-
(63)
Proceeds from sale of asset
8
14
Other
-
1
Net cash used by investing
activities
(691)
(1,419)
Cash flows provided from (used by)
financing activities:
Long-term debt payments
(403)
(56)
Proceeds from long-term debt
borrowings
750
1,528
Premium paid to retire debt
-
(10)
Financing costs paid
(29)
(43)
Finance lease obligation payments
(8)
(6)
Proceeds from sale and lease-back
transactions
-
21
Taxes paid on behalf of employees for
shares withheld
-
(2)
Other
(3)
(4)
Net cash provided from financing
activities
307
1,428
Increase in cash, cash equivalents, and
restricted cash
234
392
Cash, cash equivalents, and restricted
cash at the beginning of the period
1,246
662
Cash, cash equivalents, and restricted
cash at the end of the period
$
1,480
$
1,054
Supplemental cash flow
information:
Cash paid during the period
for:
Interest
$
153
$
135
Income tax payments (refunds), net
$
1
$
-
-
(1) Amounts represent cash movement
to/from short-term investments. Given the long-term nature of the
fiber build, we have invested cash in short-term investments to
improve interest income while preserving funding flexibility.
Frontier Communications
Parent, Inc.
Unaudited Consolidated Cash
Flow Data
For the nine months
ended
September 30, 2024
September 30, 2023
($ in
millions)
Cash flows provided from (used by)
operating activities:
Net income (loss)
$
(204)
$
12
Adjustments to reconcile net loss to net
cash provided from
(used by) operating activities:
Depreciation and amortization
1,196
1,040
Pension/OPEB special termination benefit
enhancements
11
-
Stock-based compensation
54
81
Amortization of premium
(15)
(21)
Bad debt expense
30
24
Other adjustments
10
9
Deferred income taxes
(18)
(1)
Change in accounts receivable
(3)
(35)
Change in long-term pension and other
postretirement liabilities
(156)
(149)
Change in accounts payable and other
liabilities
392
101
Change in prepaid expenses, income taxes,
and other assets
30
(13)
Net cash provided from operating
activities
1,327
1,048
Cash flows provided from (used by)
investing activities:
Capital expenditures
(1,991)
(2,882)
Purchases of short-term investments
(1)
-
(1,850)
Sale of short-term investments (1)
1,075
2,325
Purchases of long-term investments
-
(63)
Proceeds on sale of assets
12
18
Other
6
1
Net cash used by investing
activities
(898)
(2,451)
Cash flows provided from (used by)
financing activities:
Long-term debt payments
(410)
(64)
Proceeds from long-term debt
borrowings
750
2,278
Payments of vendor financing
(415)
-
Premium paid to retire debt
-
(10)
Proceeds from financing lease
transactions
-
(56)
Financing costs paid
(29)
21
Finance lease obligation payments
(23)
(18)
Taxes paid on behalf of employees for
shares withheld
(49)
(9)
Other
(12)
(7)
Net cash provided from (used by)
financing activities
(188)
2,135
Increase in cash, cash equivalents, and
restricted cash
241
732
Cash, cash equivalents, and restricted
cash at the beginning of the period
1,239
322
Cash, cash equivalents, and restricted
cash at the end of the period
$
1,480
$
1,054
Supplemental cash flow
information:
Cash paid during the period
for:
Interest
$
565
$
449
Income tax (refund) payments, net
$
(8)
$
1
(1) Amounts represent cash movement
to/from short-term investments. Given the long-term nature of the
fiber build, we have invested cash in short-term investments to
improve interest income while preserving funding flexibility.
SCHEDULE A
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
Reconciliation of Non-GAAP
Financial Measures
For the three months
ended
For the nine months
ended
September 30,
June 30,
September 30,
September 30,
September 30,
($ in
millions)
2024
2024
2023
2024
2023
Net income (loss)
$
(82)
$
(123)
$
11
$
(204)
$
12
Add back (subtract):
Income tax expense (benefit)
(6)
(9)
-
(13)
1
Interest expense
203
199
170
601
460
Investment and other (income) loss,
net
(29)
24
(67)
(117)
(101)
Operating income
86
91
114
267
372
Depreciation and amortization
410
398
356
1,196
1,040
EBITDA
$
496
$
489
$
470
$
1,463
$
1,412
Add back:
Pension/OPEB expense
$
8
$
9
$
9
$
26
$
31
Restructuring costs and other charges
28
26
16
88
48
Stock-based compensation
17
11
30
54
81
Storm-related costs
-
-
1
-
6
Legal settlement
-
25
-
25
-
Adjusted EBITDA
$
549
$
560
$
526
$
1,656
$
1,578
EBITDA margin
33.3%
33.0%
32.7%
33.0%
32.6%
Adjusted EBITDA margin
36.9%
37.8%
36.6%
37.4%
36.5%
Free Cash
Flow
Net cash provided from
operating activities
$
618
$
374
$
383
$
1,327
$
1,048
Capital expenditures
(699)
(626)
(671)
(1,991)
(2,882)
Payment of vendor financing- capital
expenditures
-
(52)
-
(415)
-
Operating free cash flow
$
(81)
$
(304)
$
(288)
$
(1,079)
$
(1,834)
SCHEDULE B
Frontier Communications
Parent, Inc.
Unaudited Consolidated
Financial Data
Reconciliation of Non-GAAP
Financial Measures
For the three months
ended
For the nine months
ended
September 30,
June 30,
September 30,
September 30,
September 30,
($ in
millions)
2024
2024
2023
2024
2023
Adjusted Operating
Expenses
Total operating expenses
$
1,403
$
1,389
$
1,322
$
4,164
$
3,953
Subtract:
Depreciation and amortization
410
398
356
1,196
1,040
Pension/OPEB expense
8
9
9
26
31
Restructuring costs and other charges
28
26
16
88
48
Stock-based compensation
17
11
30
54
81
Storm-related costs
-
-
1
-
6
Legal settlement
-
25
-
25
-
Adjusted operating expenses
$
940
$
920
$
910
$
2,775
$
2,747
SCHEDULE C
Frontier Communications
Parent, Inc.
Selected Financial and
Operating Data (1)
(Unaudited)
As of or for the quarter
ended
For the nine months
ended
September 30, 2024
June 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Broadband Revenue
($ in millions)
Total Company
Fiber
$
454
$
432
$
377
$
1,300
$
1,067
Copper
141
151
169
447
515
Total
$
595
$
583
$
546
$
1,747
$
1,582
Estimated Fiber
Passings (in millions)
Base Fiber Passings
3.2
3.2
3.2
Total Fiber Passings
7.6
7.2
6.2
Estimated
Broadband Fiber % Penetration
Base Fiber Penetration
45.7%
45.3%
43.9%
Total Fiber Penetration
30.2%
30.4%
31.2%
Broadband
Customers, end of period (in thousands)
Consumer
Fiber
2,157
2,053
1,797
Copper
666
721
870
Total
2,823
2,774
2,667
Business + Wholesale (2)
Fiber
138
134
126
Copper
96
102
120
Total
234
236
246
Broadband Net
Adds (in thousands)
Consumer
Fiber
104
90
75
Copper
(55)
(50)
(58)
Total
49
40
17
Business + Wholesale (2)
Fiber
4
2
4
Copper
(6)
(6)
(6)
Total
(2)
(4)
(2)
Broadband
Churn
Consumer
Fiber
1.49%
1.40%
1.47%
1.38%
1.36%
Copper
2.37%
2.02%
2.18%
2.11%
1.91%
Total
1.71%
1.57%
1.72%
1.58%
1.56%
Business + Wholesale (2)
Fiber
1.50%
1.31%
1.24%
1.38%
1.32%
Copper
2.05%
1.99%
1.68%
2.01%
1.75%
Total
1.73%
1.61%
1.46%
1.66%
1.54%
Broadband
ARPU
Consumer
Fiber
$
65.40
$
65.32
$
64.49
$
65.41
$
63.10
Copper
59.16
58.26
54.62
57.86
51.81
Total
$
63.85
$
63.41
$
61.15
$
63.33
$
58.99
Business + Wholesale (2)
Fiber
$
98.71
$
97.83
$
98.54
$
98.36
$
100.23
Copper
64.98
63.83
59.87
63.26
60.56
Total
$
84.52
$
85.57
$
79.35
$
82.86
$
79.76
(1) Certain operational metrics, including
passings, penetration, Base Fiber penetration, ARPU and churn are
defined in the accompanying Trending Schedule available at
Frontier's website https://investor.frontier.com.
(2) Business + Wholesale customers include
our small, medium business, larger enterprise (SME) customers and
wholesale subscribers.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241105965514/en/
Investor Contact Spencer Kurn SVP, Investor Relations +1
401-225-0475
Media Contact Chrissy Murray VP, Corporate Communications
+1 504-952-4225
Frontier Communications ... (NASDAQ:FYBR)
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