- Delivered first full year of organic Adjusted EBITDA growth in
more than 10 years
- Guides to accelerated mid-single-digit Adjusted EBITDA growth
in 2024
- Reached milestone of two million fiber broadband customers
after doubling fiber footprint since 2020
Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier”)
reported fourth-quarter and full-year 2023 results today.
“Last year, we continued the relentless execution of our
strategy, delivered strong financial performance, and achieved our
first full year of EBITDA growth in more than a decade,” said Nick
Jeffery, President and Chief Executive Officer of Frontier. “In
fact, Frontier has delivered the fastest EBITDA growth of any major
player in the fixed broadband industry for two consecutive
quarters. We believe this year marks a critical inflection point in
our business and expect to continue to accelerate EBITDA growth in
2024.”
“We have steadily built a powerful fiber growth engine, and it’s
clear that our strategy is working. As evidence, in the fourth
quarter we grew consumer fiber broadband revenues by more than 25%,
supported by solid customer and ARPU growth. As the largest
pure-play fiber internet company in America, we are ideally
positioned to enhance the value we provide customers and create
sustainable long-term value for shareholders. The future is fiber,
and I am excited for what’s ahead as we continue to unlock
Frontier’s full potential.”
Full-Year 2023 Highlights
- Passed 1.32 million new fiber locations to reach 6.5 million
total fiber locations
- Added a record 318,000 fiber broadband customers, resulting in
fiber broadband customer growth of 19% year-over-year
- Delivered revenue of $5.75 billion, net income of $29 million,
and Adjusted EBITDA of $2.13 billion1
- Executed cash capital expenditures of $3.21 billion plus $4
million of vendor financing payments, for total capital investment
of $3.22 billion2
- Generated net cash from operations of $1.34 billion
- Achieved $527 million of gross annualized cost savings,
surpassing target of $500 million
- Completed landmark $2.1 billion of fiber securitization
transactions
Fourth-Quarter 2023 Highlights
- Passed 333,000 new fiber locations
- Added 84,000 fiber broadband customers
- Revenue of $1.43 billion decreased 0.8% year-over-year as
growth in fiber-based products was offset by declines in
copper-based products
- Operating income of $120 million and net income of $17
million
- Adjusted EBITDA of $549 million increased 4.0% year-over-year,
as revenue declines were offset by lower content expenses and cost
savings1
- Adjusted EBITDA margin of 38.5% increased from 36.7% in the
fourth quarter of 20221
- Executed cash capital expenditures of $329 million plus $4
million of vendor financing payments, for total capital investment
of $333 million2
- Generated net cash from operations of $296 million
Fourth-Quarter 2023 Consumer Results
- Consumer revenue of $774 million increased 1.3% year-over-year
as strong growth in fiber broadband was partly offset by declines
in copper products
- Consumer fiber revenue of $484 million increased 11.0%
year-over-year as growth in broadband was partly offset by declines
in video, voice, and other
- Consumer fiber broadband revenue of $354 million increased
25.1% year-over-year driven by growth in both fiber broadband
customers and ARPU
- Consumer fiber broadband customer net additions of 81,000
resulted in consumer fiber broadband customer growth of 19.2%
year-over-year
- Consumer fiber broadband customer churn of 1.20% decreased from
1.32% in the fourth quarter of 2022
- Consumer fiber broadband ARPU of $64.16 increased 4.8%
year-over-year, due to increased customer in-take ARPU and annual
price increases
Fourth-Quarter 2023 Business and Wholesale Results
- Business and Wholesale revenue of $635 million decreased 3.6%
year-over-year driven by declines in both fiber and copper
- Business and Wholesale fiber revenue of $278 million decreased
2.5% year-over-year as growth in data and voice was offset by
declines in other, which were primarily driven by one-time benefits
in the fourth quarter of 2022 that did not repeat
- Business and Wholesale fiber broadband customer net additions
of 3,000 resulted in Business and Wholesale fiber broadband
customer growth of 13.2% year-over-year
- Business and Wholesale fiber broadband customer churn of 1.17%
decreased from 1.31% in the fourth quarter of 20223
- Business and Wholesale fiber broadband ARPU of $98.86 decreased
6.2% year-over-year4
Capital Structure
As of December 31, 2023, Frontier had total liquidity of $3.2
billion, including a cash and short-term investments balance of
approximately $2.2 billion, $0.5 billion of available borrowing
capacity on its revolving credit facility, and $0.5 billion of
available borrowing capacity on its variable funding notes
facility, subject to customary drawing conditions. Frontier’s net
leverage ratio on December 31, 2023, was approximately 4.3x5.
Frontier has no long-term debt maturities prior to 2027.
2024 Outlook6
Frontier’s guidance for the full year 2024 is:
- Adjusted EBITDA of $2.20 - $2.25 billion1
- New fiber passings of 1.3 million
- Cash capital investment of $3.00 - $3.20 billion2
- Cash taxes of approximately $20 million
- Net cash interest payments of approximately $750 million
- Pension and OPEB expense of approximately $40 million (net of
capitalization)
- Cash pension and OPEB contributions of approximately $125
million
Conference Call Information
As previously announced, Frontier will host a conference call to
discuss fourth-quarter and full-year 2023 results today, February
23, 2024, beginning at 8:30 a.m. Eastern Time.
The conference call webcast and presentation materials are
accessible through Frontier’s Investor Relations website and will
remain archived at this location.
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 U.S. Securities and Exchange
Commission (the “SEC”).
Forward-Looking Statements
This release contains "forward-looking statements" related to
future events, including our 2024 outlook and guidance.
Forward-looking statements address our expectations or beliefs
concerning future events, including, without limitation, our
outlook with respect to future operating and financial performance,
expected results from our implementation of strategic and cost
savings initiatives, planned financings, capital expenditures,
taxes, pension and OPEB obligations, and our ability to comply with
the covenants in the agreements governing our indebtedness 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;
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.
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the three months
ended
For the three months
ended
For the three months
ended
($ in millions and
shares in thousands, except per share amounts)
December 31, 2023
September 30, 2023
December 31, 2022
Statements of Income Data
Revenue
$
1,426
$
1,436
$
1,437
Operating expenses:
Cost of service
510
545
526
Selling, general, and administrative
expenses
396
405
452
Depreciation and amortization
375
356
312
Restructuring costs and other charges
25
16
11
Total operating expenses
1,306
1,322
1,301
Operating income
120
114
136
Investment and other income, net
177
67
144
Pension settlement costs
-
-
(5
)
Interest expense
(193
)
(170
)
(136
)
Income before income taxes
104
11
139
Income tax expense (benefit)
87
-
(16
)
Net income
$
17
$
11
$
155
Weighted average shares outstanding -
basic
245,799
245,761
245,010
Weighted average shares outstanding -
diluted
249,576
247,447
245,395
Basic net earnings per common
share
$
0.07
$
0.05
$
0.63
Diluted net earnings per common
share
$
0.07
$
0.05
$
0.63
Other Financial Data:
Capital expenditures
$
329
$
671
$
878
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the
For the
year ended
year ended
December 31,
December 31,
($ in millions and
shares in thousands, except per share amounts)
2023
2022
Statements of Income Data
Revenue
$
5,751
$
5,787
Operating expenses:
Cost of service
2,125
2,169
Selling, general, and administrative
expenses
1,646
1,745
Depreciation and amortization
1,415
1,182
Restructuring costs and other charges
73
99
Total operating expenses
5,259
5,195
Operating income
492
592
Investment and other income, net
278
554
Pension settlement costs
-
(55
)
Interest expense
(653
)
(492
)
Income before income taxes
117
599
Income tax expense
88
158
Net income
$
29
$
441
Weighted average shares outstanding -
basic
245,517
244,781
Weighted average shares outstanding -
diluted
248,459
245,280
Basic net earnings per common
share
$
0.12
$
1.80
Diluted net earnings per common
share
$
0.12
$
1.80
Other Financial Data:
Capital expenditures
$
3,211
$
2,738
Frontier Communications
Parent, Inc.
Unaudited Financial
Data
For the quarter ended
December 31,
September 30,
December 31,
($ in millions)
2023
2023
2022
Selected Statement of Income
Data
Revenue:
Data and Internet services
$
897
$
895
$
859
Voice services
329
341
362
Video services
97
104
122
Other
86
81
80
Revenue from contracts with customers
1,409
1,421
1,423
Subsidy and other revenue
17
15
14
Total revenue
$
1,426
$
1,436
$
1,437
Other Financial Data
Revenue:
Consumer
$
774
$
787
$
764
Business and wholesale
635
634
659
Revenue from contracts with customers
$
1,409
$
1,421
$
1,423
Fiber
$
762
$
760
$
721
Copper
647
661
702
Revenue from contracts with customers
$
1,409
$
1,421
$
1,423
For the year ended
For the year ended
December 31,
December 31,
($ in millions)
2023
2022
Selected Statement of Income
Data
Revenue:
Data and Internet services
$
3,534
$
3,390
Voice services
1,373
1,498
Video services
430
520
Other
339
325
Revenue from contracts with customers
5,676
5,733
Subsidy and other revenue
75
54
Total revenue
$
5,751
$
5,787
Other Financial Data
Revenue:
Consumer
$
3,097
$
3,116
Business and wholesale
2,579
2,617
Revenue from contracts with customers
$
5,676
$
5,733
Fiber
$
2,997
$
2,769
Copper
2,679
2,964
Revenue from contracts with customers
$
5,676
$
5,733
Frontier Communications
Parent, Inc.
Unaudited Operating
Data
As of and for the three months
ended
For the year ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Broadband customer metrics (1)
Broadband customers (in thousands)
2,943
2,913
2,868
2,943
2,868
Net customer additions
30
15
8
75
41
Consumer customer metrics
Customers (in thousands)
3,129
3,118
3,133
3,129
3,133
Net customer additions (losses)
11
(9
)
(9
)
(4
)
(32
)
Average monthly consumer
revenue per customer
$
82.54
$
83.99
$
81.13
$
82.53
$
82.30
Customer monthly churn
1.43
%
1.70
%
1.53
%
1.52
%
1.54
%
Employees
13,297
13,756
14,708
13,297
14,708
(1) Amounts presented include related
metrics for our wholesale customers.
Frontier Communications
Parent, Inc.
Condensed Consolidated Balance
Sheet Data
(Unaudited)
($ in
millions)
December 31, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
1,125
$
322
Short-term investments
1,075
1,750
Accounts receivable, net
446
438
Other current assets
135
87
Total current assets
2,781
2,597
Property, plant and equipment, net
13,933
11,850
Other assets
3,979
4,177
Total assets
$
20,693
$
18,624
LIABILITIES AND
EQUITY
Current liabilities:
Long-term debt due within one year
$
15
$
15
Accounts payable and other current
liabilities
2,260
2,280
Total current liabilities
2,275
2,295
Deferred income taxes and other
liabilities
1,893
2,085
Long-term debt
11,246
9,110
Equity
5,279
5,134
Total liabilities and equity
$
20,693
$
18,624
As of
December 31, 2023
Leverage
Ratio
Numerator:
Long-term debt due within one year
$
15
Long-term debt
11,246
Total debt
$
11,261
Less: Cash and cash equivalents
(1,125
)
Short-term investments
(1,075
)
Net debt
$
9,061
Denominator:
Adjusted EBITDA - last 4 quarters
$
2,127
Net Leverage Ratio
4.3x
Frontier Communications
Parent, Inc.
Unaudited Consolidated Cash
Flow Data
For the three
For the three
months ended
months ended
December 31, 2023
December 31, 2022
($ in
millions)
Cash flows provided from (used by)
operating activities:
Net income
$
17
$
155
Adjustments to reconcile net loss to net
cash provided from
(used by) operating activities:
Depreciation and amortization
375
312
Pension settlement costs
-
5
Stock-based compensation
27
29
Amortization of premium
(4
)
(7
)
Bad debt expense
11
7
Other adjustments
3
(1
)
Deferred income taxes
79
(3
)
Change in accounts receivable
(8
)
(23
)
Change in long-term pension and other
postretirement liabilities
(176
)
(129
)
Change in accounts payable and other
liabilities
(46
)
(44
)
Change in prepaid expenses, income taxes,
and other assets
18
59
Net cash provided from operating
activities
296
360
Cash flows provided from (used by)
investing activities:
Capital expenditures
(329
)
(878
)
Purchases of short-term investments
(1)
(425
)
(1,125
)
Sale of short-term investments (1)
625
1,700
Purchases of long-term investments
1
-
Proceeds from sale of asset
18
9
Other
5
4
Net cash used by investing
activities
(105
)
(290
)
Cash flows provided from (used by)
financing activities:
Long-term debt payments
(4
)
(3
)
Payments of vendor financing
(5
)
-
Financing costs paid
(6
)
-
Finance lease obligation payments
(7
)
-
Proceeds from sale and lease-back
transactions
9
(4
)
Taxes paid on behalf of employees for
shares withheld
-
(1
)
Other
7
-
Net cash used by financing
activities
(6
)
(8
)
Increase in cash, cash equivalents, and
restricted cash
185
62
Cash, cash equivalents, and restricted
cash at the beginning of the period
1,054
260
Cash, cash equivalents, and restricted
cash at the end of the period
$
1,239
$
322
Supplemental cash flow
information:
Cash paid during the period
for:
Interest
$
262
$
226
Income tax payments (refunds), net
$
(1
)
$
1
Non-cash investing activities:
Increase in capital expenditures due
to
changes in accounts payable and accrued
liabilities
$
188
$
366
Increase in capital expenditures due
to
changes in vendor financing
$
255
$
-
-
-
(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 year ended
For the year ended
December 31, 2023
December 31, 2022
($ in
millions)
Cash flows provided from (used by)
operating activities:
Net income
$
29
$
441
Adjustments to reconcile net loss to net
cash provided from
(used by) operating activities:
Depreciation and amortization
1,415
1,182
Pension settlement costs
-
55
Stock-based compensation
108
82
Amortization of premium
(25
)
(28
)
Lease impairment
-
44
Bad debt expense
35
26
Other adjustments
12
-
Deferred income taxes
78
164
Change in accounts receivable
(43
)
(7
)
Change in long-term pension and other
postretirement liabilities
(325
)
(656
)
Change in accounts payable and other
liabilities
55
51
Change in prepaid expenses, income taxes,
and other assets
5
47
Net cash provided from operating
activities
1,344
1,401
Cash flows provided from (used by)
investing activities:
Capital expenditures
(3,211
)
(2,738
)
Purchases of short-term investments
(1)
(2,275
)
(4,350
)
Sale of short-term investments (1)
2,950
2,600
Purchases of long-term investments
(62
)
-
Proceeds on sale of assets
36
13
Other
6
7
Net cash used by investing
activities
(2,556
)
(4,468
)
Cash flows provided from (used by)
financing activities:
Long-term debt payments
(68
)
(14
)
Proceeds from long-term debt
borrowings
2,278
1,200
Payments of vendor financing
(5
)
-
Premium paid to retire debt
(10
)
-
Financing costs paid
(62
)
(17
)
Finance lease obligation payments
(25
)
(19
)
Proceeds from sale and lease-back
transactions
30
70
Taxes paid on behalf of employees for
shares withheld
(9
)
(8
)
Other
-
(1
)
Net cash provided from financing
activities
2,129
1,211
Increase (Decrease) in cash, cash
equivalents, and restricted cash
917
(1,856
)
Cash, cash equivalents, and restricted
cash at the beginning of the period
322
2,178
Cash, cash equivalents, and restricted
cash at the end of the period
$
1,239
$
322
Supplemental cash flow
information:
Cash paid during the period
for:
Interest
$
711
$
512
Income tax payments, net
$
-
$
8
Non-cash investing activities:
Increase (Decrease) in capital
expenditures due to
changes in accounts payable and accrued
expenses
$
(326
)
$
797
Increase in capital expenditures due
to
changes in vendor financing
$
255
$
-
(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 year ended
December 31,
September 30,
December 31,
December 31,
December 31,
($ in
millions)
2023
2023
2022
2023
2022
Net income
$
17
$
11
$
155
$
29
$
441
Add back (subtract):
Income tax expense (benefit)
87
-
(16
)
88
158
Interest expense
193
170
136
653
492
Investment and other income, net
(177
)
(67
)
(144
)
(278
)
(554
)
Pension settlement costs
-
-
5
-
55
Operating income
120
114
136
492
592
Depreciation and amortization
375
356
312
1,415
1,182
EBITDA
$
495
$
470
$
448
$
1,907
$
1,774
Add back:
Pension/OPEB expense
$
10
$
9
$
11
$
41
$
61
Restructuring costs and other charges
(1)
25
16
11
73
99
Rebranding costs
-
-
6
-
32
Stock-based compensation
27
30
28
108
82
Storm-related costs
-
1
7
6
7
Legal settlements (recoveries)
(8
)
-
17
(8
)
25
Adjusted EBITDA
$
549
$
526
$
528
$
2,127
$
2,080
EBITDA margin
34.7
%
32.7
%
31.2
%
33.2
%
30.7
%
Adjusted EBITDA margin
38.5
%
36.6
%
36.7
%
37.0
%
35.9
%
Free Cash
Flow
Net cash provided from
operating activities
$
296
$
383
$
360
$
1,344
$
1,401
Capital expenditures
(329
)
(671
)
(878
)
(3,211
)
(2,738
)
Payment of vendor financing- capital
expenditures
(4
)
-
-
(4
)
-
Operating free cash flow
$
(37
)
$
(288
)
$
(518
)
$
(1,871
)
$
(1,337
)
(1) Includes $44 million of lease
impairment charges for the year ended December 31, 2022.
SCHEDULE B
Frontier Communications
Parent, Inc.
Unaudited Consolidated
Financial Data
Reconciliation of Non-GAAP
Financial Measures
For the three months
ended
For the year ended
December 31,
September 30,
December 31,
December 31,
December 31,
($ in
millions)
2023
2023
2022
2023
2022
Adjusted Operating
Expenses
Total operating expenses
$
1,306
$
1,322
$
1,301
$
5,259
$
5,195
Subtract:
Depreciation and amortization
375
356
312
1,415
1,182
Pension/OPEB expense
10
9
11
41
61
Restructuring costs and other charges
(1)
25
16
11
73
99
Rebranding costs
-
-
6
-
32
Stock-based compensation
27
30
28
108
82
Storm-related costs
-
1
7
6
7
Legal settlements (recoveries)
(8
)
-
17
(8
)
25
Adjusted operating expenses
$
877
$
910
$
909
$
3,624
$
3,707
(1) Includes $44 million of lease
impairment charges for the year ended December 31, 2022.
SCHEDULE C
Frontier Communications
Parent, Inc.
Selected Financial and
Operating Data
(Unaudited)
As of or for the three months
ended
For the year ended
December 31, 2023
September 30, 2023
December 31, 2022
December 31, 2023
December 31, 2022
Broadband Revenue
($ in millions)
Total Company
Fiber
$
391
$
377
$
318
$
1,458
$
1,218
Copper
159
169
182
674
769
Total
$
550
$
546
$
500
$
2,132
$
1,987
Estimated Fiber
Passings (in millions)
Base Fiber Passings
3.2
3.2
3.2
Total Fiber Passings
6.5
6.2
5.2
Estimated
Broadband Fiber % Penetration
Base Fiber Penetration
44.5
%
43.9
%
43.2
%
Total Fiber Penetration
30.9
%
31.2
%
32.6
%
Broadband
Customers, end of period (in thousands)
Consumer
Fiber
1,878
1,797
1,575
Copper
822
870
1,043
Total
2,700
2,667
2,618
Business + Wholesale (1)
Fiber
129
126
114
Copper
114
120
136
Total
243
246
250
Broadband Net
Adds (in thousands)
Consumer
Fiber
81
75
73
Copper
(48
)
(58
)
(62
)
Total
33
17
11
Business + Wholesale (1)
Fiber
3
4
4
Copper
(6
)
(6
)
(7
)
Total
(3
)
(2
)
(3
)
Broadband
Churn
Consumer
Fiber
1.20
%
1.47
%
1.32
%
1.32
%
1.38
%
Copper
1.86
%
2.18
%
1.88
%
1.90
%
1.79
%
Total
1.41
%
1.72
%
1.55
%
1.52
%
1.56
%
Business + Wholesale (1)
Fiber
1.17
%
1.24
%
1.31
%
1.28
%
1.29
%
Copper
1.73
%
1.68
%
1.81
%
1.74
%
1.66
%
Total
1.44
%
1.46
%
1.59
%
1.52
%
1.50
%
Broadband
ARPU
Consumer
Fiber
$
64.16
$
64.49
$
61.20
$
63.39
$
62.45
Copper
54.22
54.62
48.70
52.43
48.13
Total
$
61.02
$
61.15
$
56.06
$
59.52
$
56.05
Business + Wholesale (1)
Fiber
$
98.86
$
98.54
$
105.34
$
99.86
$
104.99
Copper
59.87
59.87
60.18
60.39
59.03
Total
$
80.17
$
79.35
$
80.28
$
79.85
$
78.39
Reconciliation:
Broadband ARPU
Consumer Fiber Broadband ARPU
$
64.16
$
64.49
$
61.20
$
63.39
$
62.45
Gift card impact
0.17
0.16
2.10
0.83
1.56
Adjusted Consumer Fiber Broadband
ARPU
$
64.33
$
64.65
$
63.30
$
64.22
$
64.01
(1) Business + Wholesale customers include
our small, medium business, larger enterprise (SME) customers and
wholesale subscribers.
__________________________ 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 income. 2 Cash capital
investment includes capital expenditures and vendor financing
payments for capital spend. 3 Business and Wholesale churn has been
updated for new methodology which includes wholesale, excluding
circuits or fiber-to-the-tower churn. 4 Business and Wholesale ARPU
has been updated for new methodology which includes wholesale,
excluding circuits or fiber-to-the-tower ARPU. 5 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. 6 The operational and
financial guidance expectations for 2024 comprise forward-looking
statements related to future events. See “Forward-Looking
Statements” below. Projected GAAP financial measures and
reconciliations of projected non-GAAP financial measures are not
provided herein because such GAAP financial measures are not
available on a forward-looking basis and such reconciliations could
not be derived without unreasonable effort.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240223458985/en/
Investors Spencer Kurn SVP, Investor Relations +1
401-225-0475 spencer.kurn@ftr.com Media Chrissy Murray VP,
Corporate Communications +1 504-952-4225 chrissy.murray@ftr.com
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