Business Wire | Oct 28, 2021 08:00AM EDT

Consolidated Communications Reports Third Quarter 2021 Results

Oct. 28, 2021

MATTOON, Ill.--(BUSINESS WIRE)--Oct. 28, 2021--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 2021.

"We are executing well and ahead of schedule on our fiber network deployment and are on track to upgrade more than 300,000 locations to gig-capable fiber this year," said Bob Udell, president and chief executive officer at Consolidated Communications. "So far in 2021, we have increased consumer fiber connections 20% year to date and grew consumer data average revenue per unit 7%. This progress positions Consolidated for ongoing growth and opportunity as we prepare to launch a new brand, introducing a superior fiber product and exceptional customer experience."

Third Quarter Financial Highlights (compared, where applicable, to third quarter 2020)

* Revenue totaled $318.6 million, generating Adjusted EBITDA of $127.4 million. * Consumer broadband revenue was $68.6 million, up 2.1%. * Commercial and carrier data-transport revenue was $91.1 million, up 1.1%. * Net cash from operating activities was $110.1 million; cash and short-term investments totaled $253.6 million. * Capital expenditures totaled $144.3 million, reflecting the investment related to the fiber expansion plan and 97,000 upgrades completed in the quarter.

Operating expenses were $206.6 million, $2.9 million or 1.4% lower than a year ago. The primary drivers were network cost efficiencies including lower cost of video programming, and the receipt of property tax rebates.

Income from operations totaled $32.5 million, down compared to $37.4 million a year ago. The year-over-year change was primarily due to a revenue decline of $8.5 million combined with a non-cash loss on sale of assets offset by a $6.5 million decline in depreciation and amortization expense. As part of an ongoing asset evaluation, the Company announced in September that it entered into a definitive agreement to sell substantially all of the assets of the Company's non-core, rural ILEC business located in Ohio for approximately $26 million and recorded a pre-tax non-cash loss of $5.7 million during the quarter, which included approximately $22 million of allocated goodwill. This transaction is subject to customary closing conditions, including regulatory approvals.

Net interest expense was $43.2 million, an increase of $11.5 million compared to a year ago due to the recapitalization of the balance sheet associated with the debt refinancing and the receipt of the $350 million Searchlight Capital Partners strategic investment in October 2020. Non-cash interest on the Searchlight note combined with amortization of deferred financing costs and the discount totaled $10.9 million in the third quarter 2021.

At Sept. 30, 2021, the Company recognized a non-cash loss of $2.2 million related to a change in the fair value of the Searchlight contingent payment obligations.

Cash distributions from the Company's wireless partnerships totaled $11.1 million, compared to $12.3 million a year ago.

GAAP net loss was $4.5 million, compared to net income of $14.6 million for the same period a year ago. GAAP net loss per share was ($0.05) compared to net income per share of $0.20 in the prior year. Adjusted diluted net income per share excludes certain items as outlined in the table provided in this release. Adjusted diluted net income per share was $0.18 compared to $0.23 in the year ago quarter.

Adjusted EBITDA was $127.4 million, a decrease of 3.7% from $132.2 million in the prior year primarily due to declines in voice and special access revenues partially offset by lower operating expenses.

"We're making good progress on our multi-year, fiber-first strategy and business transformation," said Steve Childers, chief financial officer at Consolidated Communications. "We have a fully funded build plan, with a strong cash and liquidity position, and we are on track to return to growth. We are increasing our capex guidance to reflect the proactive steps we have taken to secure equipment and fiber to mitigate ongoing supply chain challenges affecting our industry and the broader economy. The final investment of our Searchlight partnership is expected to close by the end of the year, following FCC approval."

2021 Outlook

Consolidated Communications updated its capex guidance for 2021 based on the Company's current pace of its build plan. The Company affirmed the other metrics included in its 2021 outlook.

Capital $440 million to $460 Previous: $400 million to $420expenditures million million

Adjusted EBITDA $500 million to $510 no change million

Cash interest $130 million to $135 no changeexpense million

Cash income taxes $2 million to $4 million no change

Conference Call

Consolidated's third quarter 2021 earnings conference call will be webcast live today at 10 a.m. ET. The webcast and materials will be available on the Investor Relations section of the Company's website at http://ir.consolidated.com. The live conference call dial-in number for analysts and investors is 833-794-0898, conference ID 9769405. A phone replay of the conference call will be available through Nov. 4 by calling 800-585-8367, enter ID 9769405.

About Consolidated Communications

Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) is dedicated to moving people, businesses and communities forward by delivering the latest reliable 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 50,000 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, as well as the conference call, includes disclosures regarding "EBITDA," "adjusted EBITDA," "total net debt to last 12 month adjusted EBITDA ratio" or "Net debt leverage ratio," and "adjusted diluted net income (loss) per share," all of which are non-GAAP financial measures and described in this section as not being in compliance with Regulation S-X. 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-GAAP financial measures may not be comparable to other similarly titled measures of other companies. A reconciliation of the differences between these non-GAAP financial measures and 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. EBITDA is defined as net earnings 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 "total net debt to last 12 month adjusted EBITDA ratio" or "Net debt leverage ratio" principally to put other non-GAAP measures in context and facilitate comparisons by investors, security analysts and others; this ratio differs in certain respects from the similar ratio used in our credit agreement. 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. Because adjusted EBITDA is a component of the ratio of total net debt to last twelve month adjusted EBITDA, these measures are also subject to the material limitations discussed above. In addition, the ratio of total net debt to last twelve month adjusted EBITDA 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.

Safe Harbor

Certain statements in this press release are forward-looking statements and are made pursuant to the safe harbor provisions of the 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. These risks and uncertainties include a number of factors related to our business, including the uncertainties relating to the impact of the novel coronavirus (COVID-19) pandemic on the Company's business, results of operations, cash flows, stock price and employees; the possibility that any of the anticipated benefits of the strategic investment from Searchlight or our refinancing of outstanding debt, including our senior secured credit facilities, will not be realized; the outcome of any legal proceedings that may be instituted against the Company or its directors; the ability to obtain regulatory approvals and meet other closing conditions to the investment on a timely basis or at all, including the risk that regulatory approvals required for the investment are not obtained subject to conditions that are not anticipated or that could adversely affect the Company or the expected benefits of the investment; the anticipated use of proceeds of the strategic investment; economic and financial market conditions generally and economic conditions in our service areas; various risks to the price and volatility of our common stock; changes in the valuation of pension plan assets; the substantial amount of debt and our ability to repay or refinance it or incur additional debt in the future; our need for a significant amount of cash to service and repay the debt restrictions contained in our debt agreements that limit the discretion of management in operating the business; regulatory changes, including changes to subsidies, rapid development and introduction of new technologies and intense competition in the telecommunications industry; risks associated with our possible pursuit of acquisitions; system failures; cyber-attacks, information or security breaches or technology failure of ours or of a third party; losses of large customers or government contracts; risks associated with the rights-of-way for the network; disruptions in the relationship with third party vendors; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; changes in the extensive governmental legislation and regulations governing telecommunications providers and the provision of telecommunications services; new or changing tax laws or regulations; telecommunications carriers disputing and/or avoiding their obligations to pay network access charges for use of our network; high costs of regulatory compliance; the competitive impact of legislation and regulatory changes in the telecommunications industry; and liability and compliance costs regarding environmental regulations; and risks associated with discontinuing paying dividends on our common stock. A detailed discussion of these and other risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements are discussed in more detail in our filings with the SEC, including our reports on Form 10-K and Form 10-Q. 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. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company and its subsidiaries to be different from those expressed or implied in the forward-looking statements. 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, forward-looking statements speak only as of the date they are made. Except as required under the federal securities laws or the rules and regulations of the SEC, we disclaim any intention or obligation to update or revise publicly any forward-looking statements. You should not place undue reliance on forward-looking statements.

Consolidated Communications Holdings, Inc.Condensed Consolidated Balance Sheets(Dollars in thousands, except share and per share amounts)(Unaudited) September 30, December 31, 2021 2020

ASSETSCurrent assets:Cash and cash equivalents $ 98,682 $ 155,561

Short-term investments 154,963 -

Accounts receivable, net 133,524 137,646

Income tax receivable 1,516 1,072

Prepaid expenses and other current assets 56,505 46,382

Assets held for sale 25,990 -

Total current assets 471,180 340,661

Property, plant and equipment, net 1,905,661 1,760,152

Investments 109,307 111,665

Goodwill 1,013,243 1,035,274

Customer relationships, net 83,782 113,418

Other intangible assets 11,175 10,557

Other assets 134,603 135,573

Total assets $ 3,728,951 $ 3,507,300

LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable $ 47,930 $ 25,283

Advance billings and customer deposits 55,192 49,544

Accrued compensation 66,723 74,957

Accrued interest 52,621 21,194

Accrued expense 91,574 81,931

Current portion of long-term debt and finance 6,944 17,561 lease obligationsLiabilities held for sale 90 -

Total current liabilities 321,074 270,470

Long-term debt and finance lease obligations 2,115,266 1,932,666

Deferred income taxes 179,479 171,021

Pension and other post-retirement obligations 269,119 300,373

Convertible security interest 262,124 238,701

Contingent payment rights 105,830 123,241

Other long-term liabilities 74,423 81,600

Total liabilities 3,327,315 3,118,072

Shareholders' equity:Common stock, par value $0.01 per share;150,000,000 and 100,000,000 shares authorized asof September 30, 2021 and December 31, 2020, 988 792 respectively, 98,754,185 and 79,227,607 sharesoutstanding as of September 30, 2021 and December31, 2020, respectivelyAdditional paid-in capital 649,667 525,673

Accumulated deficit (156,690 ) (34,514 )

Accumulated other comprehensive loss, net (99,547 ) (109,418 )

Noncontrolling interest 7,218 6,695

Total shareholders' equity 401,636 389,228

Total liabilities and shareholders' equity $ 3,728,951 $ 3,507,300

Consolidated Communications Holdings, Inc.Condensed Consolidated Statements of Operations(Dollars in thousands, except per share amounts)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2021

2020

2021

2020

Net revenues$318,584

$327,066

$963,753

$977,904

Operating expenses:Cost of services and products142,507

144,428

431,797

421,717

Selling, general and administrative expenses64,100

65,066

199,948

197,679

Loss on impairment of assets held for sale5,704

-

5,704

-

Depreciation and amortization73,765

80,220

225,455

244,024

Income from operations32,508

37,352

100,849

114,484

Other income (expense):Interest expense, net of interest income(43,176

)

(31,661

)

(137,022

)

(95,215

)

Gain (loss) on extinguishment of debt-

-

(17,101

)

234

Change in fair value of contingent payment rights(2,205

)

-

(99,619

)

-

Other income, net13,345

13,467

36,306

38,529

Income (loss) before income taxes472

19,158

(116,587

)

58,032

Income tax expense4,953

4,576

5,066

13,892

Net income (loss)(4,481

)

14,582

(121,653

)

44,140

Less: net income attributable to noncontrolling interest240

72

523

243

Net income (loss) attributable to common shareholders$(4,721

)

$14,510

$(122,176

)

$43,897

Net income (loss) per basic and diluted common shares attributable to common shareholders$(0.05

)

$0.20

$(1.47

)

$0.60

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, 2021 2020 2021 2020

Net revenues $ 318,584 $ 327,066 $ 963,753 $ 977,904

Operating expenses:Cost of services and 142,507 144,428 431,797 421,717 productsSelling, general and 64,100 65,066 199,948 197,679 administrative expensesLoss on impairment of 5,704 - 5,704 - assets held for saleDepreciation and 73,765 80,220 225,455 244,024 amortizationIncome from operations 32,508 37,352 100,849 114,484

Other income (expense):Interest expense, net of (43,176 ) (31,661 ) (137,022 ) (95,215 )interest incomeGain (loss) on - - (17,101 ) 234 extinguishment of debtChange in fair value of (2,205 ) - (99,619 ) - contingent payment rightsOther income, net 13,345 13,467 36,306 38,529

Income (loss) before 472 19,158 (116,587 ) 58,032 income taxesIncome tax expense 4,953 4,576 5,066 13,892

Net income (loss) (4,481 ) 14,582 (121,653 ) 44,140

Less: net income 240 72 523 243 attributable tononcontrolling interest Net income (loss) (4,721 ) 14,510 (122,176 ) 43,897 attributable to common $ $ $ $shareholders Net income (loss) perbasic and diluted common $ (0.05 ) $ 0.20 $ (1.47 ) $ 0.60 shares attributable tocommon shareholders Consolidated Communications Holdings, Inc.Condensed Consolidated Statements of Cash Flows(Dollars in thousands)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2021

2020

2021

2020

OPERATING ACTIVITIESNet income (loss)$(4,481

)

$14,582

$(121,653

)

$44,140

Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization73,765

80,220

225,455

244,024

Cash distributions from wireless partnerships in excess of (less than) earnings107

857

1,345

1,001

Pension and post-retirement contributions in excess of expense(11,755

)

(13,681

)

(29,968

)

(29,666

)

Non-cash, stock-based compensation3,217

2,263

7,160

5,487

Amortization of deferred financing costs and discounts4,472

1,222

13,121

3,628

Non-cash interest expense on convertible security interest8,230

-

24,334

-

Loss (gain) on extinguishment of debt-

-

17,101

(234

)

Loss on change in fair value of contingent payment rights2,205

-

99,619

-

Loss on impairment of assets held for sale5,704

-

5,704

-

Other adjustments, net(99

)

(255

)

3,632

(4,485

)

Changes in operating assets and liabilities, net28,783

30,421

50,129

33,455

Net cash provided by operating activities110,148

115,629

295,979

297,350

INVESTING ACTIVITIESPurchase of property, plant and equipment, net(144,292

)

(55,978

)

(339,488

)

(152,215

)

Purchase of short-term investments(64,996

)

-

(154,963

)

-

Proceeds from sale of assets37

904

126

6,977

Proceeds from sale of investments-

-

1,198

426

Net cash used in investing activities(209,251

)

(55,074

)

(493,127

)

(144,812

)

FINANCING ACTIVITIESProceeds from bond offering-

-

400,000

-

Proceeds from issuance of long-term debt-

-

150,000

40,000

Payment of finance lease obligations(1,529

)

(2,124

)

(4,465

)

(7,243

)

Payment on long-term debt-

(4,588

)

(397,000

)

(93,763

)

Retirement of senior notes-

-

-

(4,208

)

Payment of financing costs-

-

(8,266

)

-

Net cash provided by (used in) financing activities(1,529

)

(6,712

)

140,269

(65,214

)

Net change in cash and cash equivalents(100,632

)

53,843

(56,879

)

87,324

Cash and cash equivalents at beginning of period199,314

45,876

155,561

12,395

Cash and cash equivalents at end of period$98,682

$99,719

$98,682

$99,719

Consolidated Communications Holdings, Inc.Condensed Consolidated Statements of Cash Flows(Dollars in thousands)(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

OPERATING ACTIVITIESNet income (loss) $ (4,481 ) $ 14,582 $ (121,653 ) $ 44,140

Adjustments to reconcilenet income (loss) to netcash provided byoperating activities:Depreciation and 73,765 80,220 225,455 244,024 amortizationCash distributions fromwireless partnerships in 107 857 1,345 1,001 excess of (less than)earningsPension andpost-retirement (11,755 ) (13,681 ) (29,968 ) (29,666 )contributions in excessof expenseNon-cash, stock-based 3,217 2,263 7,160 5,487 compensationAmortization of deferred 4,472 1,222 13,121 3,628 financing costs anddiscountsNon-cash interest 8,230 - 24,334 - expense on convertiblesecurity interestLoss (gain) on - - 17,101 (234 )extinguishment of debtLoss on change in fair 2,205 - 99,619 - value of contingentpayment rightsLoss on impairment of 5,704 - 5,704 - assets held for saleOther adjustments, net (99 ) (255 ) 3,632 (4,485 )

Changes in operating 28,783 30,421 50,129 33,455 assets and liabilities,netNet cash provided by 110,148 115,629 295,979 297,350 operating activitiesINVESTING ACTIVITIESPurchase of property, (144,292 ) (55,978 ) (339,488 ) (152,215 )plant and equipment, netPurchase of short-term (64,996 ) - (154,963 ) - investmentsProceeds from sale of 37 904 126 6,977 assetsProceeds from sale of - - 1,198 426 investmentsNet cash used in (209,251 ) (55,074 ) (493,127 ) (144,812 )investing activitiesFINANCING ACTIVITIESProceeds from bond - - 400,000 - offeringProceeds from issuance - - 150,000 40,000 of long-term debtPayment of finance lease (1,529 ) (2,124 ) (4,465 ) (7,243 )obligationsPayment on long-term - (4,588 ) (397,000 ) (93,763 )debtRetirement of senior - - - (4,208 )notesPayment of financing - - (8,266 ) - costsNet cash provided by (1,529 ) (6,712 ) 140,269 (65,214 )(used in) financingactivitiesNet change in cash and (100,632 ) 53,843 (56,879 ) 87,324 cash equivalentsCash and cash 199,314 45,876 155,561 12,395 equivalents at beginningof periodCash and cash 98,682 99,719 98,682 99,719 equivalents at end of $ $ $ $period Consolidated Communications Holdings, Inc.Consolidated Revenue by Category(Dollars in thousands)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2021

2020

2021

2020

Commercial and carrier:Data and transport services (includes VoIP)$91,101

$90,153

$272,262

$269,297

Voice services42,619

45,343

130,359

136,838

Other10,580

10,909

29,785

33,027

144,300

146,405

432,406

439,162

Consumer:Broadband (VoIP and Data)68,604

67,163

202,340

196,806

Video services16,163

18,452

49,743

56,796

Voice services40,587

42,775

121,180

129,072

125,354

128,390

373,263

382,674

Subsidies17,264

18,064

52,068

54,587

Network access29,923

32,009

92,641

93,947

Other products and services1,743

2,198

13,375

7,534

Total operating revenue$318,584

$327,066

$963,753

$977,904

Consolidated Communications Holdings, Inc.Consolidated Revenue by Category(Dollars in thousands)(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

Commercial and carrier:Data and transport services $ 91,101 $ 90,153 $ 272,262 $ 269,297(includes VoIP)Voice services 42,619 45,343 130,359 136,838

Other 10,580 10,909 29,785 33,027

144,300 146,405 432,406 439,162

Consumer:Broadband (VoIP and Data) 68,604 67,163 202,340 196,806

Video services 16,163 18,452 49,743 56,796

Voice services 40,587 42,775 121,180 129,072

125,354 128,390 373,263 382,674

Subsidies 17,264 18,064 52,068 54,587

Network access 29,923 32,009 92,641 93,947

Other products and services 1,743 2,198 13,375 7,534

Total operating revenue $ 318,584 $ 327,066 $ 963,753 $ 977,904

Consolidated Communications Holdings, Inc.Consolidated Revenue Trend by Category(Dollars in thousands)(Unaudited)Three Months EndedQ3 2021Q2 2021Q1 2021Q4 2020Q3 2020Commercial and carrier:Data and transport services (includes VoIP)$91,101

$90,813

$90,348

$92,781

$90,153

Voice services42,619

43,461

44,279

44,862

45,343

Other10,580

9,486

9,719

12,128

10,909

144,300

143,760

144,346

149,771

146,405

Consumer:Broadband (VoIP and Data)68,604

67,981

65,755

66,253

67,163

Video services16,163

16,799

16,781

17,547

18,452

Voice services40,587

40,173

40,420

41,431

42,775

125,354

124,953

122,956

125,231

128,390

Subsidies17,264

17,465

17,339

17,402

18,064

Network access29,923

31,115

31,603

31,314

32,009

Other products and services1,743

3,110

8,522

2,406

2,198

Total operating revenue$318,584

$320,403

$324,766

$326,124

$327,066

Consolidated Communications Holdings, Inc.Consolidated Revenue Trend by Category(Dollars in thousands)(Unaudited) Three Months Ended Q3 2021 Q2 2021 Q1 2021 Q4 2020 Q3 2020Commercial and carrier:Data and transport $ 91,101 $ 90,813 $ 90,348 $ 92,781 $ 90,153services (includes VoIP)Voice services 42,619 43,461 44,279 44,862 45,343

Other 10,580 9,486 9,719 12,128 10,909

144,300 143,760 144,346 149,771 146,405

Consumer:Broadband (VoIP and Data) 68,604 67,981 65,755 66,253 67,163

Video services 16,163 16,799 16,781 17,547 18,452

Voice services 40,587 40,173 40,420 41,431 42,775

125,354 124,953 122,956 125,231 128,390

Subsidies 17,264 17,465 17,339 17,402 18,064

Network access 29,923 31,115 31,603 31,314 32,009

Other products and 1,743 3,110 8,522 2,406 2,198servicesTotal operating revenue $ 318,584 $ 320,403 $ 324,766 $ 326,124 $ 327,066

Consolidated Communications Holdings, Inc.Schedule of Adjusted EBITDA Calculation(Dollars in thousands)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2021

2020

2021

2020

Net income (loss)$(4,481

)

$14,582

$(121,653

)

$44,140

Add (subtract):Income tax expense4,953

4,576

5,066

13,892

Interest expense, net43,176

31,661

137,022

95,215

Depreciation and amortization73,765

80,220

225,455

244,024

EBITDA117,413

131,039

245,890

397,271

Adjustments to EBITDA (1):Other, net (2)951

35

11,387

(3,280

)

Investment income (accrual basis)(11,052

)

(11,510

)

(32,047

)

(31,269

)

Investment distributions (cash basis)11,127

12,350

33,160

32,046

Pension/OPEB benefit(2,207

)

(1,937

)

(7,290

)

(3,107

)

Loss (gain) on extinguishment of debt-

-

17,101

(234

)

Loss on impairment5,704

-

5,704

-

Change in fair value of contingent payment right2,205

-

99,619

-

Non-cash compensation (3)3,217

2,263

7,160

5,487

Adjusted EBITDA$127,358

$132,240

$380,684

$396,914

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.Consolidated Communications Holdings, Inc.Schedule of Adjusted EBITDA Calculation(Dollars in thousands)(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

Net income (loss) $ (4,481 ) $ 14,582 $ (121,653 ) $ 44,140

Add (subtract):Income tax expense 4,953 4,576 5,066 13,892

Interest expense, net 43,176 31,661 137,022 95,215

Depreciation and 73,765 80,220 225,455 244,024 amortizationEBITDA 117,413 131,039 245,890 397,271

Adjustments to EBITDA (1):Other, net (2) 951 35 11,387 (3,280 )

Investment income (accrual (11,052 ) (11,510 ) (32,047 ) (31,269 )basis)Investment distributions 11,127 12,350 33,160 32,046 (cash basis)Pension/OPEB benefit (2,207 ) (1,937 ) (7,290 ) (3,107 )

Loss (gain) on - - 17,101 (234 )extinguishment of debtLoss on impairment 5,704 - 5,704 -

Change in fair value of 2,205 - 99,619 - contingent payment rightNon-cash compensation (3) 3,217 2,263 7,160 5,487

Adjusted EBITDA $ 127,358 $ 132,240 $ 380,684 $ 396,914

Notes:(1) These adjustments reflect those required or permitted by the lenders underour 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 SharePlan, which because of the non-cash nature of the expenses are excluded fromadjusted EBITDA.Consolidated Communications Holdings, Inc.Reconciliation of Net Loss to Adjusted EBITDA Guidance(Dollars in millions)(Unaudited)Twelve Months EndedDecember 31, 2021RangeLowHighNet loss$ (120

)

$ (105

)

Add:Income tax expense5

10

Interest expense, net175

170

Depreciation and amortization302

297

EBITDA362

372

Adjustments to EBITDA (1):Other, net (2)15

15

Pension/OPEB benefit(10

)

(10

)

Loss on extinguishment of debt17

17

Loss on impairment6

6

Change in fair value of contingent payment right100

100

Non-cash compensation (3)10

10

Adjusted EBITDA$ 500

$ 510

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, cash distributions less equity earnings from our investments, dividend income, 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.Consolidated Communications Holdings, Inc.Reconciliation of Net Loss to Adjusted EBITDA Guidance(Dollars in millions)(Unaudited) Twelve Months Ended December 31, 2021 Range Low HighNet loss $ (120 ) $ (105 )

Add:Income tax expense 5 10

Interest expense, net 175 170

Depreciation and amortization 302 297

EBITDA 362 372

Adjustments to EBITDA (1):Other, net (2) 15 15

Pension/OPEB benefit (10 ) (10 )

Loss on extinguishment of debt 17 17

Loss on impairment 6 6

Change in fair value of contingent payment right 100 100

Non-cash compensation (3) 10 10

Adjusted EBITDA $ 500 $ 510

Notes:(1) These adjustments reflect those required or permitted by the lenders underour credit agreement.(2) Other, net includes income attributable to noncontrolling interests, cashdistributions less equity earnings from our investments, dividend income,acquisition and non-recurring related costs and certain miscellaneous items.(3) Represents compensation expenses in connection with our Restricted SharePlan, which because of the non-cash nature of the expenses are excluded fromadjusted EBITDA.Consolidated Communications Holdings, Inc.Total Net Debt to LTM Adjusted EBITDA Ratio(Dollars in thousands)(Unaudited)September 30,2021

Summary of Outstanding Debt:Term loans, net of discount $10,699$989,176

6.50% Senior secured notes due 2028750,000

5.00% Senior secured notes due 2028400,000

Finance leases22,166

Total debt as of September 30, 20212,161,342

Less deferred debt issuance costs(39,132

)

Less cash on hand(253,645

)

Total net debt as of September 30, 2021$1,868,565

Adjusted EBITDA for the twelve months ended September 30, 2021$512,994

Total Net Debt to last twelve months Adjusted EBITDA3.64xConsolidated Communications Holdings, Inc.Total Net Debt to LTM Adjusted EBITDA Ratio(Dollars in thousands)(Unaudited) September 30, 2021

Summary of Outstanding Debt:Term loans, net of discount $10,699 $ 989,176

6.50% Senior secured notes due 2028 750,000

5.00% Senior secured notes due 2028 400,000

Finance leases 22,166

Total debt as of September 30, 2021 2,161,342

Less deferred debt issuance costs (39,132 )

Less cash on hand (253,645 )

Total net debt as of September 30, 2021 $ 1,868,565

Adjusted EBITDA for the twelve months ended September 30, 2021 $ 512,994

Total Net Debt to last twelve months Adjusted EBITDA 3.64xConsolidated Communications Holdings, Inc.Adjusted Net Income and Net Income Per Share(Dollars in thousands, except per share amounts)(Unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2021

2020

2021

2020

Net income (loss)$(4,481

)

$14,582

$(121,653

)

$44,140

Integration and severance related costs, net of tax674

-

2,353

31

Storm costs (recoveries), net of tax-

6

-

(104

)

Loss on impairment of assets held for sale5,704

-

5,704

-

Loss (gain) on disposition of wireless spectrum licenses, net of tax-

-

2,641

(2,714

)

Loss on disposition of fixed wireless, net of tax-

-

3,085

-

Loss (gain) on extinguishment of debt, net of tax-

-

12,639

(178

)

Change in fair value of contingent payment rights2,205

-

99,619

-

Non-cash interest expense for Searchlight note including amortization of discount and fees10,944

-

32,006

-

Non-cash interest expense for swaps, net of tax(261

)

(187

)

(682

)

(568

)

Non-cash stock compensation, net of tax2,378

1,722

5,292

4,176

Adjusted net income$17,163

$16,123

$41,003

$44,783

Weighted average number of shares outstanding92,791

71,153

83,003

71,153

Adjusted diluted net income per share$0.18

$0.23

$0.49

$0.63

Notes:Calculations above assume a 26.1% and 23.9% effective tax rate for the three months ended September 30, 2021 and 2020, respectively and 26.1% and 23.9% for the nine months ended September 30, 2021 and 2020, respectively.Consolidated Communications Holdings, Inc.Adjusted Net Income and Net Income Per Share(Dollars in thousands, except per share amounts)(Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020

Net income (loss) $ (4,481 ) $ 14,582 $ (121,653 ) $ 44,140

Integration and severance 674 - 2,353 31 related costs, net of taxStorm costs (recoveries), net - 6 - (104 )of taxLoss on impairment of assets 5,704 - 5,704 - held for saleLoss (gain) on disposition of - - 2,641 (2,714 )wireless spectrum licenses,net of taxLoss on disposition of fixed - - 3,085 - wireless, net of taxLoss (gain) on extinguishment - - 12,639 (178 )of debt, net of taxChange in fair value of 2,205 - 99,619 - contingent payment rightsNon-cash interest expense forSearchlight note including 10,944 - 32,006 - amortization of discount andfeesNon-cash interest expense for (261 ) (187 ) (682 ) (568 )swaps, net of taxNon-cash stock compensation, 2,378 1,722 5,292 4,176 net of taxAdjusted net income $ 17,163 $ 16,123 $ 41,003 $ 44,783

Weighted average number of 92,791 71,153 83,003 71,153 shares outstandingAdjusted diluted net income $ 0.18 $ 0.23 $ 0.49 $ 0.63 per share Notes:Calculations above assume a 26.1% and 23.9% effective tax rate for the threemonths ended September 30, 2021 and 2020, respectively and 26.1% and 23.9% forthe nine months ended September 30, 2021 and 2020, respectively.Consolidated Communications Holdings, Inc.Key Operating Metrics(Unaudited)September 30,June 30,March 31,December 31,September 30,2021

2021

2021

2020

2020

PassingsFttP - Gig+494,100

397,100

320,800

275,000

273,000

Fiber Node/DSL2,255,600

2,347,800

2,421,300

2,460,900

2,460,900

Total Passings2,749,700

2,744,900

2,742,100

2,735,900

2,733,900

FttP - Gig+ %18%

14%

12%

10%

10%

Consumer Data ConnectionsFttP - Gig+65,929

61,911

58,885

55,000

54,833

Fiber Node/DSL324,732

331,569

339,117

346,357

352,826

Total Consumer Data Connections390,661

393,480

398,002

401,357

407,659

Consumer Data Penetrations %FttP - Gig+13%

16%

18%

20%

20%

Fiber Node/DSL14%

14%

14%

14%

14%

Total Consumer Data Penetration %14%

14%

15%

15%

15%

Consumer Data ARPU$58.48

$57.26

$55.24

$54.41

$54.51

Consumer ARPU$79.24

$77.84

$75.19

$75.25

$76.07

Consumer Voice Connections341,135

352,835

362,384

370,660

380,236

Video Connections66,971

70,795

73,986

76,041

77,854

Fiber route network miles (long-haul, metro and FttP)50,405

48,727

47,364

46,664

46,326

On-net buildings14,625

14,253

13,910

13,564

13,202

Notes:In Q1 2021, the Company launched a multi-year, fiber build plan to upgrade 1.6 million passings by 2025 or 70% of our service area to Gig+ fiber capable services by 2025. As of Sept. 30, 2021, 219,000 of the target 300,000 passings for 2021 were upgraded to FttP. Tag: [Consolidated-Communications-Earnings]

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CONTACT: Investor and Media Contact Jennifer Spaude, Consolidated Communications Phone: 507-386-3765 jennifer.spaude@consolidated.com