UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the quarterly period ended March 31, 2024 | |
| |
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
For the transition period from to |
Commission File Number: 001-38101
WideOpenWest, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
46-0552948 |
|
|
7887 East Belleview Avenue, Suite 1000 |
80111 |
(720) 479-3500
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Common Stock |
WOW |
New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☒ |
|
|
Non-accelerated filer ☐ |
Smaller reporting company ☐ |
Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of outstanding shares of the registrant’s common stock as of May 3, 2024 was 84,566,866.
WIDEOPENWEST, INC AND SUBSIDIARIES
FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2024
TABLE OF CONTENTS
|
|
Page |
|
||
|
1 |
|
|
2 |
|
|
3 |
|
|
4 |
|
|
5 |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 |
|
23 |
||
24 |
||
25 |
||
25 |
||
25 |
||
25 |
||
25 |
||
25 |
||
25 |
||
26 |
This Quarterly Report on Form 10-Q is for the three months ended March 31, 2024. Any statement contained in a prior periodic report shall be deemed to be modified or superseded for purposes of this Quarterly Report to the extent that a statement contained herein modifies or supersedes such statement. The Securities and Exchange Commission allows us to “incorporate by reference” information that we file with them, which means that we can disclose important information by referring you directly to those documents. Information incorporated by reference is considered to be part of this Quarterly Report. References in this Quarterly Report to “WOW,” “we,” “us,” “our” or “the Company” are to WideOpenWest, Inc. and its direct and indirect subsidiaries, unless the context specifies or requires otherwise.
i
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly Report that are not historical facts contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent our goals, beliefs, plans and expectations about our prospects for the future and other future events. Such statements involve certain risks, uncertainties and assumptions. Forward-looking statements include all statements that are not historical fact and can be identified by terms such as “may,” “intend,” “might,” “will,” “should,” “could,” “would,” “anticipate,” “expect,” “believe,” “estimate,” “plan,” “project,” “predict,” “potential,” or the negative of these terms. Although these forward-looking statements reflect our good-faith belief and reasonable judgment based on current information, these statements are qualified by important factors, many of which are beyond our control, that could cause our actual results to differ materially from those in the forward-looking statements, including, but not limited to:
● | the ability to retain and further attract customers due to increased competition, resource abilities of competitors, and shifts in the entertainment desires of customers; |
● | our ability to respond to rapid technological change, including our ability to develop and deploy new products and technologies; |
● | increases in programming and retransmission costs and/or programming exclusivity in favor of our competitors; |
● | the disruption or failure of our network information systems or technologies as a result of hacking, viruses, outages or natural disasters in one or more of our geographic markets; |
● | the effects of new regulations or regulatory changes on our business; |
● | our substantial level of indebtedness and our ability to comply with all covenants in our debt agreements; |
● | our ability to procure necessary materials, equipment and services from our vendors in a timely manner in connection with our network expansion initiatives; |
● | changes in laws and government regulations that may impact the availability and cost of capital; |
● | effects of uncertain economic conditions (e.g., unemployment, decreased disposable income, etc.) which may negatively affect our customers’ demand or ability to pay for our current and future products and services; |
● | our ability to manage the risks involved in the foregoing; and |
other factors described from time to time in our reports filed or furnished with the SEC, and in particular those factors set forth in the section entitled “Risk Factors” in our annual report filed on Form 10-K with the SEC on March 13, 2024 and other reports subsequently filed with the SEC. Given these uncertainties, you should not place undue reliance on any such forward-looking statements. The forward-looking statements included in this report are made as of the date hereof or the date specified herein, based on information available to us as of such date. Except as required by law, we assume no obligation to update these forward-looking statements, even if new information becomes available in the future.
ii
PART I-FINANCIAL INFORMATION
WIDEOPENWEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
|
|
March 31, |
|
December 31, |
||
|
|
2024 |
|
2023 |
||
|
|
(in millions, except share data) |
||||
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
19.2 |
|
$ |
23.4 |
Accounts receivable—trade, net of allowance for doubtful accounts of $6.4 and $6.7, respectively |
|
|
37.3 |
|
|
38.8 |
Accounts receivable—other, net |
|
|
8.4 |
|
|
9.5 |
Prepaid expenses and other |
|
|
47.0 |
|
|
38.5 |
Total current assets |
|
|
111.9 |
|
|
110.2 |
Right-of-use lease assets—operating |
|
|
21.6 |
|
|
20.1 |
Property, plant and equipment, net |
|
|
848.1 |
|
|
830.4 |
Franchise operating rights |
|
|
278.3 |
|
|
278.3 |
Goodwill |
|
|
225.1 |
|
|
225.1 |
Intangible assets subject to amortization, net |
|
|
0.9 |
|
|
1.0 |
Other non-current assets |
|
|
50.1 |
|
|
49.6 |
Total assets |
|
$ |
1,536.0 |
|
$ |
1,514.7 |
Liabilities and stockholders’ equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable—trade |
|
$ |
61.8 |
|
$ |
59.5 |
Accrued interest |
|
|
1.8 |
|
|
1.6 |
Current portion of long-term lease liability—operating |
|
|
4.4 |
|
|
4.3 |
Accrued liabilities and other |
|
|
58.2 |
|
|
60.0 |
Current portion of long-term debt and finance lease obligations |
|
|
17.5 |
|
|
18.8 |
Current portion of unearned service revenue |
|
|
25.4 |
|
|
25.4 |
Total current liabilities |
|
|
169.1 |
|
|
169.6 |
Long-term debt and finance lease obligations, net of debt issuance costs —less current portion |
|
|
952.4 |
|
|
915.7 |
Long-term lease liability—operating |
|
|
19.5 |
|
|
18.0 |
Deferred income taxes, net |
|
|
124.2 |
|
|
125.7 |
Other non-current liabilities |
|
|
26.2 |
|
|
27.5 |
Total liabilities |
|
|
1,291.4 |
|
|
1,256.5 |
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
Preferred stock, $0.01 par value, 100,000,000 shares authorized; 0 shares issued and outstanding |
|
|
— |
|
|
— |
Common stock, $0.01 par value, 700,000,000 shares authorized; 98,706,060 and 98,594,629 issued as of March 31, 2024 and December 31, 2023, respectively; 83,329,326 and 83,557,786 outstanding as of March 31, 2024 and December 31, 2023, respectively |
|
|
1.0 |
|
|
1.0 |
Additional paid-in capital |
|
|
394.8 |
|
|
391.8 |
Retained earnings |
|
|
5.3 |
|
|
20.3 |
Treasury stock at cost, 15,376,734 and 15,036,843 shares as of March 31, 2024 and December 31, 2023, respectively |
|
|
(156.5) |
|
|
(154.9) |
Total stockholders’ equity |
|
|
244.6 |
|
|
258.2 |
Total liabilities and stockholders’ equity |
|
$ |
1,536.0 |
|
$ |
1,514.7 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
WIDEOPENWEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions, except per share and share data) |
||||
Revenue |
|
$ |
161.5 |
|
$ |
172.2 |
Costs and expenses: |
|
|
|
|
|
|
Operating (excluding depreciation and amortization) |
|
|
67.5 |
|
|
78.1 |
Selling, general and administrative |
|
|
36.4 |
|
|
85.5 |
Depreciation and amortization |
|
|
52.4 |
|
|
45.5 |
|
|
|
156.3 |
|
|
209.1 |
Income (loss) from operations |
|
|
5.2 |
|
|
(36.9) |
Other income (expense): |
|
|
|
|
|
|
Interest expense |
|
|
(21.0) |
|
|
(14.9) |
Other income, net |
|
|
0.3 |
|
|
1.2 |
Loss before provision for income tax |
|
|
(15.5) |
|
|
(50.6) |
Income tax benefit |
|
|
0.5 |
|
|
12.6 |
Net loss |
|
$ |
(15.0) |
|
$ |
(38.0) |
|
|
|
|
|
|
|
Basic and diluted loss per common share |
|
|
|
|
|
|
Basic |
|
$ |
(0.18) |
|
$ |
(0.46) |
Diluted |
|
$ |
(0.18) |
|
$ |
(0.46) |
Weighted-average common shares outstanding |
|
|
|
|
|
|
Basic |
|
|
81,347,672 |
|
|
83,028,769 |
Diluted |
|
|
81,347,672 |
|
|
83,028,769 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
WIDEOPENWEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common |
|
Treasury |
|
Additional |
|
|
|
|
Total |
||||
|
|
Common |
|
Stock |
|
Stock at |
|
Paid-in |
|
Retained |
|
Stockholders' |
|||||
|
|
Stock |
|
Par Value |
|
Cost |
|
Capital |
|
Earnings |
|
Equity |
|||||
|
|
(in millions, except share data) |
|||||||||||||||
Balances at January 1, 2024 |
|
83,557,786 |
|
$ |
1.0 |
|
$ |
(154.9) |
|
$ |
391.8 |
|
$ |
20.3 |
|
$ |
258.2 |
Stock-based compensation |
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
|
— |
|
|
3.0 |
Issuance of restricted stock, net |
|
111,431 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Purchase of shares |
|
(339,891) |
|
|
— |
|
|
(1.6) |
|
|
— |
|
|
— |
|
|
(1.6) |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(15.0) |
|
|
(15.0) |
Balances at March 31, 2024(1) |
|
83,329,326 |
|
$ |
1.0 |
|
$ |
(156.5) |
|
$ |
394.8 |
|
$ |
5.3 |
|
$ |
244.6 |
(1) | Included in outstanding shares as of March 31, 2024 are 1,482,690 non-vested shares of restricted stock awards granted to employees and directors. |
|
|
|
|
Common |
|
Treasury |
|
Additional |
|
|
|
Total |
|||||
|
|
Common |
|
Stock |
|
Stock at |
|
Paid-in |
|
Retained |
|
Stockholders' |
|||||
|
|
Stock |
|
Par Value |
|
Cost |
|
Capital |
|
Earnings |
|
Equity |
|||||
|
|
(in millions, except share data) |
|||||||||||||||
Balances at January 1, 2023 |
|
86,417,733 |
|
$ |
1.0 |
|
$ |
(108.6) |
|
$ |
374.7 |
|
$ |
308.0 |
|
$ |
575.1 |
Stock-based compensation |
|
— |
|
|
— |
|
|
— |
|
|
5.6 |
|
|
— |
|
|
5.6 |
Issuance of restricted stock, net |
|
1,783,965 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Purchase of shares |
|
(2,642,178) |
|
|
— |
|
|
(28.4) |
|
|
— |
|
|
— |
|
|
(28.4) |
Net loss |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(38.0) |
|
|
(38.0) |
Balances at March 31, 2023(1) |
|
85,559,520 |
|
$ |
1.0 |
|
$ |
(137.0) |
|
$ |
380.3 |
|
$ |
270.0 |
|
$ |
514.3 |
(1) |
Included in outstanding shares as of March 31, 2023 are 3,057,037 non-vested shares of restricted stock awards granted to employees and directors. |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
WIDEOPENWEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(15.0) |
|
$ |
(38.0) |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
52.7 |
|
|
45.5 |
Deferred income taxes |
|
|
(1.4) |
|
|
(14.5) |
Provision for doubtful accounts |
|
|
2.7 |
|
|
2.6 |
Gain on sale of operating assets, net |
|
|
(0.3) |
|
|
— |
Amortization of debt issuance costs and discount |
|
|
0.4 |
|
|
0.4 |
Change in fair value of derivative instruments |
|
|
1.1 |
|
|
— |
Non-cash compensation |
|
|
3.0 |
|
|
5.4 |
Other non-cash items |
|
|
(0.2) |
|
|
(0.1) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Receivables and other operating assets |
|
|
(6.0) |
|
|
(5.4) |
Payables and accruals |
|
|
(3.8) |
|
|
36.7 |
Net cash provided by operating activities |
|
$ |
33.2 |
|
$ |
32.6 |
Cash flows from investing activities: |
|
|
|
|
|
|
Capital expenditures |
|
$ |
(72.5) |
|
$ |
(60.2) |
Other investing activities |
|
|
— |
|
|
0.1 |
Net cash used in investing activities |
|
$ |
(72.5) |
|
$ |
(60.1) |
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from issuance of long-term debt, net |
|
$ |
40.0 |
|
$ |
51.0 |
Payments on long-term debt and finance lease obligations |
|
|
(5.4) |
|
|
(4.9) |
Reimbursement of finance lease payments |
|
|
1.7 |
|
|
— |
Purchase of shares |
|
|
(1.2) |
|
|
(28.4) |
Net cash provided by financing activities |
|
$ |
35.1 |
|
$ |
17.7 |
Decrease in cash and cash equivalents |
|
|
(4.2) |
|
|
(9.8) |
Cash and cash equivalents, beginning of period |
|
|
23.4 |
|
|
31.0 |
Cash and cash equivalents, end of period |
|
$ |
19.2 |
|
$ |
21.2 |
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
Cash paid during the periods for interest, net |
|
$ |
19.3 |
|
$ |
14.5 |
Cash paid during the periods for income taxes |
|
$ |
— |
|
$ |
— |
Cash received during the periods for refunds of income taxes |
|
$ |
— |
|
$ |
4.3 |
Non-cash operating activities: |
|
|
|
|
|
|
Operating lease additions |
|
$ |
2.5 |
|
$ |
0.8 |
Non-cash investing and financing activities: |
|
|
|
|
|
|
Finance lease additions |
|
$ |
0.5 |
|
$ |
1.9 |
Excise tax payable |
|
$ |
0.4 |
|
$ |
— |
Capital expenditures within accounts payable and accruals |
|
$ |
41.4 |
|
$ |
32.2 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
WIDEOPENWEST, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2024
(unaudited)
Note 1. General Information
WideOpenWest, Inc. (“WOW” or the “Company”) is one of the nation’s leading broadband providers offering an expansive portfolio of advanced services, including high-speed data (“HSD”), cable television (“Video”), and digital telephony (“Telephony”) services to residential and business customers. The Company serves customers in 16 markets in the United States which consist of Detroit and Lansing, Michigan; Augusta, Columbus, Newnan and West Point, Georgia; Charleston and Greenville County, South Carolina; Dothan, Auburn, Huntsville and Montgomery, Alabama; Knoxville, Tennessee; and Panama City, Pinellas County and Seminole County, Florida.
The Company’s operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker, on a consolidated basis. The CEO assesses performance and allocates resources based on the consolidated results of operations. Under this organizational and reporting structure, the Company operates as one reportable segment.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”); however, in the opinion of management, the disclosures made are adequate to ensure the information presented is not misleading. The year-end consolidated balance sheet was derived from audited financial statements.
In the opinion of management, all normally recurring adjustments considered necessary for the fair presentation of the financial statements have been included, and the financial statements present fairly the financial position and results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results expected for the full year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the 2023 Annual Report filed with the SEC on March 13, 2024.
All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make assumptions and estimates that affect the reported amounts and disclosures of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts and disclosures of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. To the extent there are differences between those estimates and actual results, the unaudited condensed consolidated financial statements may be materially affected.
5
Recently Issued Accounting Standards
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures
In November 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvement to Reportable Segment Disclosures. ASU 2023-07 will require public business entities (“PBEs”) to disclose, on an annual and interim basis, significant segment expenses provided to the chief operating decision maker (“CODM”) including a profit and loss; an amount for other segment items by reportable segment, including a description of composition; annual disclosures about a reportable segment’s profit or loss; if a CODM uses more than one measure of a segment’s profit or loss the PBE may report one or more of those additional measures; and requires that a PBE disclose the title and position of the CODM. The updated disclosure requirements are to be adopted for annual periods beginning after December 15, 2023. The Company does not anticipate adoption will have a material impact on the financial position, results of operations or cash flows.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures
In October 2023, FASB issued Accounting Standard Update (“ASU”) 2023-09, Income Taxes (Topic 740), Improvement to Income Tax Disclosures. ASU 2023-09 will require all entities to disclose more detailed information in their reconciliation of their statutory tax rate to their effective tax rate. This requires PBEs to include incremental detail in a numerical, tabular format, while all other entities will do so through enhanced qualitative disclosures. The ASU also requires entities to disclose more detailed information about income taxes paid, including by jurisdiction; pretax income (or loss) from continuing operations; and income tax expense (or benefit). The updated disclosure requirements are to be adopted for annual periods beginning after December 15, 2023. The Company does not anticipate adoption will have a material impact on the financial position, results of operations or cash flows.
Note 3. Revenue from Contracts with Customers
Revenue by Service Offering
The following table presents revenue by service offering:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Residential subscription |
|
|
|
|
|
|
HSD |
|
$ |
86.9 |
|
$ |
86.8 |
Video |
|
|
29.3 |
|
|
39.2 |
Telephony |
|
|
4.8 |
|
|
5.6 |
Total residential subscription |
|
$ |
121.0 |
|
$ |
131.6 |
Business subscription |
|
|
|
|
|
|
HSD |
|
$ |
19.3 |
|
$ |
18.4 |
Video |
|
|
2.5 |
|
|
2.9 |
Telephony |
|
|
6.2 |
|
|
6.5 |
Total business subscription |
|
$ |
28.0 |
|
$ |
27.8 |
Total subscription services revenue |
|
|
149.0 |
|
|
159.4 |
Other business services revenue(1) |
|
|
5.3 |
|
|
5.2 |
Other revenue |
|
|
7.2 |
|
|
7.6 |
Total revenue |
|
$ |
161.5 |
|
$ |
172.2 |
(1) | Includes wholesale and colocation lease revenue of $5.0 million and $4.7 million the three months ended March 31, 2024 and 2023, respectively. |
6
Promotional Costs
The following table summarizes the activity of promotional costs:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Balance at beginning of period |
|
$ |
20.4 |
|
$ |
18.0 |
Deferral |
|
|
2.1 |
|
|
2.1 |
Amortization |
|
|
(2.2) |
|
|
(1.6) |
Balance at end of period |
|
$ |
20.3 |
|
$ |
18.5 |
The following table presents the current and non-current portion of promotional costs for the periods presented:
|
|
March 31, 2024 |
|
December 31, 2023 |
||
|
|
(in millions) |
||||
Current promotional costs |
|
$ |
8.3 |
|
$ |
8.0 |
Non-current promotional costs |
|
|
12.0 |
|
|
12.4 |
Total promotional costs |
|
$ |
20.3 |
|
$ |
20.4 |
Costs of Obtaining Contracts with Customers
The following table summarizes the activity of costs of obtaining contracts with customers:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Balance at beginning of period |
|
$ |
42.4 |
|
$ |
39.5 |
Deferral |
|
|
4.7 |
|
|
4.4 |
Amortization |
|
|
(4.2) |
|
|
(4.0) |
Balance at end of period |
|
$ |
42.9 |
|
$ |
39.9 |
The following table presents the current and non-current portion of costs of obtaining contracts with customers as of the end of the corresponding periods:
|
|
March 31, 2024 |
|
December 31, 2023 |
||
|
|
(in millions) |
||||
Current costs of obtaining contracts with customers |
|
$ |
16.7 |
|
$ |
16.5 |
Non-current costs of obtaining contracts with customers |
|
|
26.2 |
|
|
25.9 |
Total costs of obtaining contracts with customers |
|
$ |
42.9 |
|
$ |
42.4 |
The current portion and the non-current portion of costs of obtaining contracts with customers are included in prepaid expenses and other and other non-current assets, respectively, in the Company’s unaudited condensed consolidated balance sheets. Amortization of costs of obtaining contracts with customers is included in selling, general and administrative expense in the Company’s unaudited condensed consolidated statements of operations.
7
Contract Liabilities
The following table summarizes the activity of current and non-current contract liabilities:
|
|
Three months ended |
||||||
|
|
March 31, |
||||||
|
|
2024 |
|
2023 |
||||
|
|
(in millions) |
||||||
Balance at beginning of period |
|
$ |
2.5 |
|
$ |
2.7 |
||
Deferral |
|
|
2.4 |
|
|
2.5 |
||
Revenue recognized |
|
|
(2.6) |
|
|
(2.7) |
||
Balance at end of period |
|
$ |
2.3 |
|
$ |
2.5 |
The following table presents the current and non-current portion of contract liabilities as of the end of the corresponding periods:
|
|
March 31, 2024 |
|
December 31, 2023 |
||||
|
|
(in millions) |
||||||
Current contract liabilities |
|
$ |
2.1 |
|
$ |
2.2 |
||
Non-current contract liabilities |
|
|
0.2 |
|
|
0.3 |
||
Total contract liabilities |
|
$ |
2.3 |
|
$ |
2.5 |
The current portion and the non-current portion of contract liabilities are included in the current portion of unearned service revenue and other non-current liabilities, respectively, in the Company’s unaudited condensed consolidated balance sheets.
Unsatisfied Performance Obligations
Revenue from month-to-month residential subscription service contracts have historically represented a significant portion of the Company’s revenue and the Company expects that this will continue to be the case in future periods. All residential subscription service performance obligations will be satisfied within one year.
A summary of expected business subscription and other business services revenue to be recognized in future periods related to performance obligations which have not been satisfied or are partially unsatisfied as of March 31, 2024 is set forth in the table below:
|
|
2024 |
|
2025 |
|
2026 |
|
Thereafter |
|
Total |
|||||
|
|
(in millions) |
|||||||||||||
Subscription services |
|
$ |
36.2 |
|
$ |
27.0 |
|
$ |
9.0 |
|
$ |
3.7 |
|
$ |
75.9 |
Other business services |
|
|
2.4 |
|
|
1.8 |
|
|
0.8 |
|
|
0.2 |
|
|
5.2 |
Total expected revenue |
|
$ |
38.6 |
|
$ |
28.8 |
|
$ |
9.8 |
|
$ |
3.9 |
|
$ |
81.1 |
Provision for Doubtful Accounts
The provision for doubtful accounts and the allowance for doubtful accounts are based on the aging of the individual receivables, historical trends and current and anticipated future economic conditions. The Company manages credit risk by disconnecting services to customers who are delinquent, generally after 100 days of delinquency. The individual receivables are written-off after all reasonable efforts to collect the funds have been made. Actual write-offs may differ from the amounts reserved.
8
The following table presents the change in the allowance for doubtful accounts for trade accounts receivable:
|
|
Three months ended |
|||||||
|
|
March 31, |
|||||||
|
|
2024 |
|
2023 |
|||||
|
|
(in millions) |
|||||||
Accounts receivable - trade |
|
$ |
43.7 |
|
$ |
43.1 |
|||
|
|
|
|
|
|
|
|||
Allowance for doubtful accounts: |
|
|
|
|
|
|
|||
Balance at beginning of period |
|
$ |
6.7 |
|
$ |
4.3 |
|||
Provision charged to expense |
|
|
2.7 |
|
|
2.6 |
|||
Accounts written off, net of recoveries |
|
|
(3.0) |
|
|
(2.1) |
|||
Balance at end of period |
|
$ |
6.4 |
|
$ |
4.8 |
|||
|
|
|
|
|
|
|
|||
Accounts receivable - trade, net of allowance for doubtful accounts |
|
$ |
37.3 |
|
$ |
38.3 |
Note 4. Plant, Property and Equipment, Net
Plant, property and equipment consists of the following:
|
|
March 31, |
|
December 31, |
||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Distribution facilities |
|
$ |
1,573.8 |
|
$ |
1,510.6 |
Head-end equipment |
|
|
289.9 |
|
|
296.5 |
Customer premise equipment |
|
|
276.8 |
|
|
274.9 |
Computer equipment and software |
|
|
187.9 |
|
|
182.0 |
Telephony infrastructure |
|
|
48.0 |
|
|
48.0 |
Buildings and leasehold improvements |
|
|
33.7 |
|
|
33.4 |
Vehicles |
|
|
28.4 |
|
|
28.1 |
Office and technical equipment |
|
|
19.1 |
|
|
19.1 |
Land |
|
|
4.4 |
|
|
4.4 |
Construction in progress (including material inventory and other) |
|
|
70.3 |
|
|
76.6 |
Total property, plant and equipment |
|
|
2,532.3 |
|
|
2,473.6 |
Less accumulated depreciation |
|
|
(1,684.2) |
|
|
(1,643.2) |
|
|
$ |
848.1 |
|
$ |
830.4 |
Depreciation expense for the three months ended March 31, 2024 and 2023 was $52.7 million and $45.4 million, respectively. Included in depreciation and amortization expense in the consolidated statement of operations were net gains on sales of operating assets of $0.3 million and nil for the three months ended March 31, 2024 and 2023, respectively.
9
Note 5. Accrued Liabilities and Other
Accrued liabilities and other consists of the following:
|
|
March 31, |
|
December 31, |
||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Payroll and employee benefits |
|
$ |
16.4 |
|
$ |
15.5 |
Programming costs |
|
|
11.5 |
|
|
11.4 |
Other accrued liabilities |
|
|
7.0 |
|
|
6.8 |
Employee severance |
|
|
6.9 |
|
|
5.4 |
Patent litigation settlement |
|
|
5.8 |
|
|
10.0 |
Franchise and revenue sharing fees |
|
|
3.9 |
|
|
4.9 |
Property, income, sales and use taxes |
|
|
2.8 |
|
|
1.5 |
Utility pole costs |
|
|
2.0 |
|
|
2.4 |
Professional fees |
|
|
1.9 |
|
|
2.1 |
|
|
$ |
58.2 |
|
$ |
60.0 |
Note 6. Long-Term Debt and Finance Leases
The following table summarizes the Company’s long-term debt and finance leases:
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|
|
March 31, 2024 |
|
2023 |
||||||||
|
|
Available |
|
|
|
|
|
|||||
|
|
borrowing |
|
Effective |
|
|
Outstanding |
|
Outstanding |
|||
|
|
capacity |
|
interest rate(1) |
|
|
balance |
|
balance |
|||
|
|
(in millions) |
||||||||||
Long-term debt: |
|
|
|
|
|
|
|
|
|
|
|
|
Term B Loans, net(2) |
|
$ |
— |
|
8.30 |
% |
|
$ |
709.6 |
|
$ |
711.3 |
Revolving Credit Facility(3) |
|
|
4.3 |
|
8.07 |
% |
|
|
241.0 |
|
|
201.0 |
Total long-term debt |
|
$ |
4.3 |
|
|
|
|
|
950.6 |
|
|
912.3 |
Other Financing |
|
|
|
|
|
|
|
|
1.3 |
|
|
1.4 |
Finance lease obligations |
|
|
|
|
|
|
|
|
21.5 |
|
|
24.6 |
Total long-term debt, finance lease obligations and other |
|
|
|
|
|
|
|
|
973.4 |
|
|
938.3 |
Debt issuance costs, net(4) |
|
|
|
|
|
|
|
|
(3.5) |
|
|
(3.8) |
Sub-total |
|
|
|
|
|
|
|
|
969.9 |
|
|
934.5 |
Less current portion |
|
|
|
|
|
|
|
|
(17.5) |
|
|
(18.8) |
Long-term portion |
|
|
|
|
|
|
|
$ |
952.4 |
|
$ |
915.7 |
(1) | Represents the effective interest rate in effect for all borrowings outstanding as of March 31, 2024 pursuant to each debt instrument including the applicable margin. |
(2) | At March 31, 2024 and December 31, 2023 includes $3.9 million and $4.1 million of net unamortized discounts, respectively. |
(3) | Available borrowing capacity at March 31, 2024 represents $250.0 million of total availability less borrowing of $241.0 million on the Revolving Credit Facility and outstanding letters of credit of $4.7 million. Letters of credit are used in the ordinary course of business and are released when the respective contractual obligations have been fulfilled by the Company. |
(4) | At March 31, 2024 and December 31, 2023, debt issuance costs include $2.9 million and $3.0 million related to Term B Loans and $0.7 million and $0.8 million related to the Revolving Credit Facility, respectively. |
10
On December 20, 2021, the Company entered into a secured credit agreement with Morgan Stanley Senior Funding, Inc., as administrative agent, collateral agent and issuing bank (the “Credit Agreement”). The Credit Agreement consists of (i) a Senior Secured Term B Loan in an aggregate principal amount of $730.0 million (“Term B Loan”) and (ii) a $250.0 million revolving credit commitment (“Revolving Credit Facility” together with the Term B Loan, the “Senior Secured Credit Facility”). The Term B Loan matures in December 2028 and bears interest at a rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 3.00%, subject to a 50 basis point floor, and the revolving credit commitment bears interest at a rate equal to SOFR plus 2.75%, subject to a 50 basis point commitment fee rate for unused commitments, and matures in December 2026. The Term B Loans and Revolving Credit Facility are secured on a first-priority basis by a lien on substantially all of the Company’s assets, subject to certain exceptions and permitted liens.
As of March 31, 2024, the Company was in compliance with all debt covenants.
Note 7. Stock-Based Compensation
The Company’s stock incentive plan, the 2017 Omnibus Incentive Plan, provides for grants of stock options, restricted stock and performance awards. The Company’s directors, officers and other employees and persons who engage in services for the Company are eligible for grants under the plan. The stock incentive plan has authorized 15,924,128 shares of the Company’s common stock to be available for issuance, subject to adjustment in the event of a reorganization, stock split, merger or similar change in the Company’s corporate structure or the outstanding shares of common stock.
Restricted stock awards generally vest ratably over a four year period based on the date of grant. For restricted stock awards that contain only service conditions for vesting, the Company calculates the award fair value based on the closing stock price on the accounting grant date.
The Company recorded $3.0 million and $5.4 million of total non-cash compensation expense for the three months ended March 31, 2024 and 2023, respectively. Certain awards were modified during the year ended December 31, 2021 and were classified as liabilities. The remainder of these liability-based awards were settled with shares of restricted stock for nil and approximately $0.3 million for the three months ended March 31, 2024 and 2023, respectively.
The following table presents restricted stock activity during the three months ended March 31, 2024:
|
|
Number of |
|
|
Unvested |
|
|
Restricted Stock |
|
|
Shares |
Outstanding, beginning of period |
|
2,451,026 |
Granted |
|
164,725 |
Vested |
|
(1,079,767) |
Forfeited |
|
(53,294) |
Outstanding, end of period(1) |
|
1,482,690 |
(1) | The total outstanding non-vested shares of restricted stock awards granted to employees and directors are included in total outstanding shares as of March 31, 2024. |
Performance Shares
The Company began issuing performance shares to certain executives in 2020. Each performance share grant has a performance period of three years and is based on the Company’s achievement level relative to: 50% based upon the Company’s Total Shareholder Return (“TSR”) relative to the TSRs of the Company’s peer group and 50% based on the Company’s three-year cumulative EBITDA metric.
The performance shares based on three-year cumulative EBITDA have a performance condition. The probability of achieving the performance condition is assessed at each reporting period. If it is deemed probable that the performance condition will be met, compensation cost will be recognized based on the closing price per share of the Company's common stock on the date of the grant multiplied by the number of awards expected to be earned.
11
If it is deemed that it is not probable that the performance condition will be met, the Company will discontinue the recognition of compensation cost and any compensation cost previously recorded will be reversed. As of March 31, 2024, the Company determined that it was not probable that the performance condition based on three-year cumulative EBITDA would be met for the performance shares issued in 2022 and 2023. This conclusion is consistent with the assessment performed at December 31, 2023 and as such, no compensation expense has been recognized for these awards.
Note 8. Equity
On October 4, 2022, the Company’s Board of Directors authorized the Company to repurchase up to $50.0 million of its outstanding common stock. The Company completed the Share Repurchase Program in June 2023 with approximately 4.9 million shares purchased for $50.4 million (including commissions).
The following table summarizes the Company’s purchases of WOW common stock during the three months ended March 31, 2024 and 2023, respectively. These shares are reflected as treasury stock in the Company’s consolidated balance sheets.
|
|
Three months ended |
||
|
|
March 31, |
||
|
|
2024 |
|
2023 |
|
|
(shares) |
||
Share buybacks |
|
— |
|
1,941,033 |
Income tax withholding(1) |
|
339,891 |
|
701,145 |
|
|
339,891 |
|
2,642,178 |
(1) | Generally, the Company withholds shares to cover the income tax withholdings of the employee upon vesting. These shares are not part of the board approved Share Repurchase Program. |
Note 9. Earnings per Common Share
Basic earnings or loss per share attributable to the Company’s common stockholders is computed by dividing net income or loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings or loss per share attributable to common stockholders presents the dilutive effect, if any, on a per share basis of potential common shares (such as restricted stock units) as if they had been vested or converted during the periods presented. No such items were included in the computation of diluted loss or earnings per share for the three months ending March 31, 2024 or 2023 because the Company incurred a net loss and the effect of inclusion would have been anti-dilutive.
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions, except share data) |
||||
Net loss |
|
$ |
(15.0) |
|
$ |
(38.0) |
|
|
|
|
|
|
|
Basic weighted-average shares |
|
|
81,347,672 |
|
|
83,028,769 |
Effect of dilutive securities: |
|
|
|
|
|
|
Restricted stock awards |
|
|
— |
|
|
— |
Diluted weighted-average shares |
|
|
81,347,672 |
|
|
83,028,769 |
|
|
|
|
|
|
|
Basic and diluted (loss) earnings per common share |
|
|
|
|
|
|
Basic |
|
$ |
(0.18) |
|
$ |
(0.46) |
Diluted |
|
$ |
(0.18) |
|
$ |
(0.46) |
12
Note 10. Fair Value Measurements
The fair values of cash and cash equivalents, receivables and trade payables approximate their carrying values due to the short-term nature of these instruments. For assets and liabilities of a long-term nature, the Company determines fair value based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. Market or observable inputs are the preferred source of values, followed by unobservable inputs or assumptions based on hypothetical transactions in the absence of market inputs. The Company applies the following hierarchy in determining fair value:
● | Level 1, defined as observable inputs being quoted prices in active markets for identical assets; |
● | Level 2, defined as observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and |
● | Level 3, defined as values determined using models that utilize significant unobservable inputs for which little or no market data exists, discounted cash flow methodologies or similar techniques, or other determinations requiring significant management judgment or estimation. |
During the first quarter of 2024, the Company entered into five interest rate swap arrangements. The Company’s derivative instrument is accounted for at fair value on a recurring basis and classified within Level 2 of the valuation hierarchy.
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
||||
|
|
(in millions) |
||||||||||
Financial Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps (1) |
|
$ |
— |
|
$ |
3.1 |
|
$ |
— |
|
$ |
3.1 |
Total |
|
$ |
— |
|
$ |
3.1 |
|
$ |
— |
|
$ |
3.1 |
Financial Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps (1) |
|
$ |
— |
|
$ |
4.2 |
|
$ |
— |
|
$ |
4.2 |
Long-term debt, net (2) |
|
|
— |
|
|
619.0 |
|
|
— |
|
|
619.0 |
Total |
|
$ |
— |
|
$ |
623.2 |
|
$ |
— |
|
$ |
623.2 |
(1) | Measured as the present value of all expected future cash flows based on the SOFR-based swap yield curves as of March 31, 2024. The present value calculation uses discount rates that have been adjusted to reflect the credit quality of the Company and its counterparties. |
(2) | Measured based on dealer quotes considering current market rates for the Company’s credit facility. The ratio of the Company’s aggregate debt balance has trended from quoted market prices in active markets to quoted prices in non-active markets. Debt fair value does not include debt issuance costs and discount. |
There were no transfers into or out of Level 1, 2 or 3 during the periods ended March 31, 2024 and December 31, 2023.
The Company’s nonfinancial assets such as franchise operating rights, property, plant, and equipment, and other intangible assets are not measured at fair value on a recurring basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. When such impairments are recorded, fair values are generally classified within Level 3 of the valuation hierarchy.
13
Note 11. Derivative Instruments
The Company is exposed to certain risks during the normal course of its business arising from adverse changes in interest rates. The Company selectively uses derivative financial instruments (“derivatives”), including interest rate swaps, to manage interest rate risk. The Company does not hold or issue derivative instruments for speculative purposes. Fluctuations in interest rates can be volatile, and the Company’s risk management activities do not totally eliminate these risks. Consequently, these fluctuations could have a significant effect on the Company’s financial results.
The Company’s exposure to interest rate risk results primarily from its variable rate borrowings. At various points during the first quarter of 2024, the Company entered into five separate pay-fixed interest rate swap agreements for a notional amount of $100 million each.
As of March 31, 2024, the Company is the fixed rate payor on five interest rate swap contracts that effectively fix the SOFR-based index used to determine the interest rates charged on the Company’s total long-term debt of $954.5 million, not including unamortized debt issuance costs and discount. These contracts fix approximately 52% of the Company’s term loan variable rate exposure at an average of 4.3% expiration dates of February and March 2027. The Company accounts for each agreement on a fair value basis at each reporting period.
The following table summarizes the notional amounts and fair values of the Company’s outstanding derivatives by risk category and instrument type within the condensed consolidated balance sheet as of March 31, 2024. The Company did not have any derivative instruments as of December 31, 2023.
|
|
|
|
|
Fair Value |
|
Fair Value |
||
|
|
|
|
|
Other |
|
Other |
||
|
|
Notional |
|
Current |
|
Non-current |
|||
|
|
Amount |
|
Assets |
|
Liabilities |
|||
Derivatives Instruments |
|
(in millions) |
|||||||
Interest rate swap contracts as of March 31, 2024 |
|
$ |
500.0 |
|
$ |
3.1 |
|
$ |
4.2 |
The Company recognized the change in fair value of $1.1 million, offset by cash receipts of $0.4 million, in interest expense in the condensed consolidated income statement related to these agreements for the three months ended March 31, 2024. See additional disclosure information related to these derivative instruments in Note 10 – Fair Value Measurements.
Note 12. Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference is expected to reverse. Additionally, the impact on deferred tax assets and liabilities of changes in tax rates is reflected in the financial statements in the period that includes the date of enactment.
The Company reported income tax benefit of $0.5 million and $12.6 million for the three months ended March 31, 2024 and 2023, respectively. The change to income tax benefit was primarily related to an increase in income from operations and valuation allowance quarter over quarter.
14
Note 13. Commitments and Contingencies
Sprint Patent Infringement Claim. On March 7, 2018, Sprint Communications Company LP (“Sprint”) filed a complaint in the U.S. District Court for the District of Delaware alleging that the Company infringed a set of patents directed to the provision of Voice over Internet Protocol (“VoIP”) services. This lawsuit was part of a larger, decade long patent enforcement campaign by Sprint aimed at numerous service providers in the broadband and telecommunications industry. In April 2023, prior to the commencement of the Company’s jury trial on April 24, 2023, the Company and Sprint entered into settlement discussions and also conducted a formal mediation. Those discussions culminated in a negotiated resolution of the pending litigation, for which the parties executed a binding term sheet on April 19, 2023, and a Confidential Settlement and License Agreement on April 28, 2023. The terms of the settlement are confidential, but the agreement does obligate the Company to make payments to Sprint over the course of three years in exchange for a full release of all liability.
The Company intends to pursue funding contributions for that settlement from third parties implicated by Sprint’s claims and the Company’s defense, including indemnification claims against the Company’s various affected equipment providers. As a result of the settlement, the Company accrued $46.8 million as of March 31, 2023, and the associated expense was included in selling, general and administrative expenses for the quarter ended March 31, 2023.
The Company is also party to various other legal proceedings (including individual, class and putative class actions) arising in the normal course of its business covering a wide range of matters and types of claims including, but not limited to, general contracts, billing disputes, rights of access, programming, taxes, fees and surcharges, consumer protection, trademark and patent infringement, employment, regulatory, tort, claims of competitors and disputes with other carriers.
In accordance with GAAP, the Company accrues an expense for pending litigation when it determines that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. Legal defense costs are expensed as incurred. None of the Company’s existing accruals for pending matters are material. The Company consistently monitors its pending litigation for the purpose of adjusting its accruals and revising its disclosures accordingly, in accordance with GAAP, when required. However, litigation is subject to uncertainty, and the outcome of any particular matter is not predictable. The Company will vigorously defend its interests in pending litigation, and the Company believes that the ultimate resolution of all such matters, after considering insurance coverage or other indemnities to which it is entitled, will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows.
15
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are one of the nation’s leading broadband providers offering an expansive portfolio of advanced services, including high-speed data (“HSD”), cable television (“Video”), and digital telephony (“Telephony”) services to residential customers and offer a full range of products and services to business customers. Our services are delivered across 16 markets via our efficient, advanced hybrid fiber-coax (“HFC”) network. Our footprint covers certain suburban areas within the states of Alabama, Florida, Georgia, Michigan, South Carolina and Tennessee. At March 31, 2024, our broadband networks passed 1.9 million homes and businesses and served 500,700 customers.
Our core strategy is to provide outstanding service at affordable prices. We execute this strategy by managing our operations to focus on the customer. We believe that the customer experience should be reliable, easy and pleasantly surprising, every time. To achieve this customer experience, we operate one of the most technically advanced and high-performing networks in the industry.
We operate under a broadband first strategy. Our advanced network offers HSD speeds up to 1.2 GIG (1200 Mbps) in approximately 99% of our footprint and HSD speeds up to 5 GIG (5000 Mbps) in our greenfield expansion markets. Led by our robust HSD offering, our products are available either as an individual service or a bundle to residential and business service customers. Based on our per subscriber economics, we believe that HSD represents the greatest opportunity to enhance profitability across our residential and business markets.
For the three months ended March 31, 2024, the average percentage of HSD only new connections was approximately 92% compared to an average percentage of approximately 88% for the three months ended March 31, 2023. Of the HSD only customers, approximately 72% of the new connections purchased 500MB or higher speeds during the three months ended March 31, 2024, representing a 4% decrease compared to the three months ended March 31, 2023.
WOW is continuing to focus on its market expansion strategy by building out its network in locations adjacent and nonadjacent to its existing network and bringing its state-of-the-art all IP fiber technology and award-winning customer service to those markets. During 2023, WOW launched services in the communities of Altamonte Springs, Wekiwa Springs, Casselberry, and Forest City in Florida as well as Headland, Alabama and Mauldin, SC. During the three months ended March 31, 2024, we continued to launch services in communities throughout Central Florida.
Key Transactions Impacting Operating Results and Financial Condition
Share Repurchase Program
On October 4, 2022, our Board of Directors authorized us to repurchase up to $50.0 million of our outstanding common stock. The Company completed the Share Repurchase Program in June 2023 with approximately 4.9 million shares purchased for $50.4 million (including commissions). During the quarter ended March 31, 2023, we repurchased 1.9 million shares for approximately $21.1 million as part of the Share Repurchase Program.
Critical Accounting Estimates
For a discussion of our critical accounting estimates and the means by which we develop estimates refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K. There have been no material changes from the critical estimates described in our Form 10-K.
16
Homes Passed and Subscribers
We report homes passed as the number of serviceable addresses, such as single residence homes, apartments and condominium units, and businesses passed by our broadband network and listed in our database. We report total subscribers as the number of subscribers who receive at least one of our HSD, Video or Telephony services, without regard to which or how many services they subscribe. We define each of the individual HSD subscribers, Video subscribers and Telephony subscribers as a revenue generating unit (“RGU”). The following table summarizes homes passed, total subscribers and total RGUs for our services as of each respective date and for comparability purposes, presents subscribers associated with the Company’s operations as of each specified date:
|
|
Mar. 31, |
|
Jun. 30, |
|
Sep. 30, |
|
Dec. 31, |
|
Mar. 31, |
|
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2024 |
Homes passed |
|
1,885,700 |
|
1,892,600 |
|
1,905,600 |
|
1,932,200 |
|
1,948,500 |
Total subscribers |
|
527,300 |
|
522,400 |
|
517,400 |
|
504,100 |
|
500,700 |
HSD RGUs |
|
508,700 |
|
507,800 |
|
503,400 |
|
490,100 |
|
489,700 |
Video RGUs |
|
117,100 |
|
110,000 |
|
100,800 |
|
90,800 |
|
79,300 |
Telephony RGUs |
|
87,700 |
|
85,300 |
|
82,700 |
|
79,500 |
|
77,700 |
Total RGUs |
|
713,500 |
|
703,100 |
|
686,900 |
|
660,400 |
|
646,700 |
The following table displays the homes passed and subscribers related to the Company’s market expansion activities, which includes edge-outs and Greenfield expansion:
|
|
Mar. 31, |
|
Jun. 30, |
|
Sep. 30, |
|
Dec. 31, |
|
Mar. 31, |
|
|
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2024 |
Homes passed |
|
85,600 |
|
92,800 |
|
106,700 |
|
129,600 |
|
147,700 |
Total subscribers |
|
21,200 |
|
23,200 |
|
25,800 |
|
28,100 |
|
32,200 |
HSD RGUs |
|
21,100 |
|
22,900 |
|
25,600 |
|
27,900 |
|
31,900 |
Video RGUs |
|
6,900 |
|
7,000 |
|
7,000 |
|
7,100 |
|
7,200 |
Telephony RGUs |
|
2,900 |
|
3,100 |
|
3,600 |
|
3,800 |
|
4,200 |
Total RGUs |
|
30,900 |
|
33,000 |
|
36,200 |
|
38,800 |
|
43,300 |
While we take appropriate steps to ensure subscriber information is presented on a consistent and accurate basis at any given balance sheet date, we periodically review our policies in light of the variability we may encounter across our different markets due to the nature and pricing of products, services and billing systems. Accordingly, we may from time to time make appropriate adjustments to our subscriber information based on such reviews.
Financial Statement Presentation
Revenue
Our operating revenue is primarily derived from monthly recurring charges for HSD, Video, Telephony and other business services to residential and business customers, in addition to other revenues.
● | HSD revenue consists primarily of fixed monthly fees for data service and rental of modems. |
● | Video revenue consists primarily of fixed monthly fees for basic, premium and digital cable television services and rental of video converter equipment, as well as charges from optional services, such as pay-per-view, video-on-demand and other events available to the customer. The Company is required to pay certain cable franchising authorities an amount based on the percentage of gross revenue derived from video services. The Company generally passes these fees on to the customer, which is included in video revenue. |
● | Telephony revenue consists primarily of fixed monthly fees for local service and enhanced services, such as call waiting, voice mail and measured and flat rate long-distance service. |
17
● | Other business service revenue consists primarily of monthly recurring charges for session initiated protocol, web hosting, metro Ethernet, wireless backhaul, broadband carrier services and cloud infrastructure services provided to business customers. |
● | Other revenue consists primarily of revenue from paper statement fees, revenue from late fees, line assurance warranty services provided to residential and business customers and advertising placement. |
Revenues attributable to monthly subscription fees charged to customers for our HSD, Video and Telephony services provided by our broadband networks were 92% and 93% of total revenue for the three months ended March 31, 2024 and March 31, 2023, respectively. The remaining percentage of total revenue represents non-subscription revenue primarily from other business services, line assurance warranty services and advertising placement.
Costs and Expenses
Our expenses primarily consist of operating, selling, general and administrative expenses, depreciation and amortization expense, and interest expense.
Operating expenses primarily include programming costs, data costs, transport costs and network access fees related to our HSD, Video and Telephony services, hardware/software expenses, network operations and maintenance services, customer service and call center expenses, bad debt, billing and collection expenses and franchise and other regulatory fees.
Selling, general and administrative expenses primarily include salaries and benefits of corporate and field management, sales and marketing personnel, human resources and related administrative costs.
Depreciation and amortization includes depreciation of our network infrastructure, including associated equipment, hardware and software, buildings and leasehold improvements, and finance lease obligations. Amortization is recognized on other intangible assets with definite lives primarily related to acquisitions. Depreciation and amortization expense is presented separately from operating and selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations.
We control our costs of operations by maintaining strict controls on expenditures. More specifically, we are focused on managing our cost structure by improving workforce productivity, increasing the effectiveness of our purchasing activities and maintaining discipline in customer acquisition. We expect programming expenses to continue to increase per Video subscriber due to a variety of factors, including increased demands by owners of some broadcast stations for carriage of other services or payments to those broadcasters for retransmission consent and annual increases imposed by programmers with additional selling power as a result of media consolidation. We have not been able to fully pass these increases on to our customers without the loss of customers, nor do we expect to be able to do so in the future.
18
Results of Operations
The following table summarizes our results of operations for the periods presented:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Revenue |
|
$ |
161.5 |
|
$ |
172.2 |
Costs and expenses: |
|
|
|
|
|
|
Operating (excluding depreciation and amortization) |
|
|
67.5 |
|
|
78.1 |
Selling, general and administrative |
|
|
36.4 |
|
|
85.5 |
Depreciation and amortization |
|
|
52.4 |
|
|
45.5 |
|
|
|
156.3 |
|
|
209.1 |
Income (loss) from operations |
|
|
5.2 |
|
|
(36.9) |
Other income (expense): |
|
|
|
|
|
|
Interest expense |
|
|
(21.0) |
|
|
(14.9) |
Other income, net |
|
|
0.3 |
|
|
1.2 |
Loss before provision for income tax |
|
|
(15.5) |
|
|
(50.6) |
Income tax benefit |
|
|
0.5 |
|
|
12.6 |
Net loss |
|
$ |
(15.0) |
|
$ |
(38.0) |
Revenue
Total revenue for the three months ended March 31, 2024 decreased $10.7 million, or 6%, as compared to revenue for the three months ended March 31, 2023 as follows:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Residential subscription |
|
$ |
121.0 |
|
$ |
131.6 |
Business subscription |
|
|
28.0 |
|
|
27.8 |
Total subscription |
|
|
149.0 |
|
|
159.4 |
Other business services |
|
|
5.3 |
|
|
5.2 |
Other |
|
|
7.2 |
|
|
7.6 |
Total revenue |
|
$ |
161.5 |
|
$ |
172.2 |
Subscription Revenue
Total subscription revenue decreased $10.4 million, or 7%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily driven by a $11.4 million shift in service offering mix as a result of the reduction in Video and HSD RGUs, coupled with a $6.7 million decrease in volume across all services. This decrease was partially offset by a $7.7 million increase in average revenue per unit (“ARPU”) as a result of rate increases in the third quarter of 2023 and first quarter of 2024. ARPU is calculated as subscription revenue for each of the HSD, Video and Telephony services divided by the average total RGUs for each service category for the respective period.
19
Other Business Services
Other business services revenue increased $0.1 million, or 2%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily due to an increase in wholesale revenue offset by decreases in data center revenue.
Other Revenue
Other revenue decreased $0.4 million, or 5%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily due to decreases in advertising and shopping revenue, partially offset by an increase in paper statement revenue.
Operating expenses (excluding depreciation and amortization)
Operating expenses (excluding depreciation and amortization) decreased $10.6 million, or 14%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily driven by decreases in direct operating expense, specifically programming expense of $8.9 million, which aligns with the reduction in Video RGUs between periods, increases in capitalizable eligible expenses, and decreases in insurance expenses.
Incremental contribution
Incremental contribution is defined as subscription services revenue less costs directly incurred from third parties in connection with the provision of such services to our customers (service direct expense). Incremental contribution decreased $2.4 million, or 2% during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily due to a reduction in Video and Telephony revenue for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Selling, general and administrative expenses
Selling, general and administrative expenses decreased $49.1 million, or 57%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily attributable to the effect of the patent litigation settlement incurred in 2023, and a decrease in stock compensation expense, marketing expenses, and certain cash compensation expenses partially offset by increases in employee severance charges and other professional service fees.
Depreciation and amortization expenses
Depreciation and amortization expenses increased $6.9 million, or 15%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily due to an increase of equipment placed into service as we continue to expand our network.
Interest expense
Interest expense increased $6.1 million, or 41%, in the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is primarily due to a higher overall debt balance combined with higher interest rates, and entrance into five interest rate derivative instruments during the first quarter of 2024. The change in the fair value of the derivative instruments is presented in interest expense each period.
Other income
Other income decreased $0.9 million, or 75%, during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease is primarily related to the decline in services provided as part of the Transition Services Agreements under which WOW was providing post-transaction continuity of service to the two different buyers of our sold service areas during the transition periods. The agreements with both buyers ended in 2023.
20
Income tax benefit
We reported income tax benefit of $0.5 million and $12.6 million for the three months ended March 31, 2024 and 2023, respectively. The change to income tax benefit was primarily related to an increase in income from operations and valuation allowance quarter over quarter.
Use of Incremental Contribution
Incremental contribution is included herein because we believe that it is a key metric used by our management to assess the financial performance of the business by showing how the relative relationship of the various components of subscription services contributes to our overall consolidated historical results. Our management further believes that it provides useful information to investors in evaluating our financial condition and results of operations because the additional detail illustrates how an incremental dollar of revenue generates cash, before any unallocated costs are considered, which we believe is a key component of our overall strategy and important for understanding what drives our cash flow position relative to our historical results. Incremental contribution is defined by us as the components of subscription revenue, less costs directly incurred from third parties in connection with the provision of such services to our customers.
Incremental contribution is not made in accordance with GAAP and our use of the term incremental contribution varies from others in our industry. Incremental contribution should be considered in addition to, not as a substitute for, consolidated net income (loss) and operating income (loss) or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows, or as measures of liquidity. Incremental contribution has important limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP as it does not identify or allocate any other operating costs and expenses that are components of our income from operations to specific subscription revenues as we do not measure or record such costs and expenses in a manner that would allow attribution to a specific component of subscription revenue. Accordingly, incremental contribution should not be considered as an alternative to operating income or any other performance measures derived in accordance with GAAP as measures of operating performance or operating cash flows, or as a measure of liquidity.
The following table provides a reconciliation of incremental contribution to income from operations, which is the most directly comparable GAAP measure, for the three months ended March 31, 2024 and 2023:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Income (loss) from operations |
|
$ |
5.2 |
|
$ |
(36.9) |
Revenue (excluding subscription revenue) |
|
|
(12.5) |
|
|
(12.8) |
Other non-allocated operating expense (excluding depreciation and amortization) |
|
|
37.3 |
|
|
39.9 |
Selling, general and administrative |
|
|
36.4 |
|
|
85.5 |
Depreciation and amortization |
|
|
52.4 |
|
|
45.5 |
Incremental contribution |
|
$ |
118.8 |
|
$ |
121.2 |
21
Liquidity and Capital Resources
Our primary funding requirements are for our ongoing operations, capital expenditures, outstanding debt obligations, including lease agreements, and strategic investments. At March 31, 2024, the principal amount of our outstanding consolidated debt aggregated to $969.9 million, of which $17.5 million is classified as current in our unaudited condensed consolidated balance sheet as of such date. As of March 31, 2024, we had borrowing capacity of $4.3 million under our Revolving Credit Facility.
We are required to prepay principal amounts if we generate excess cash flow, as defined in the Credit Agreement. As of March 31, 2024, we had $19.2 million of cash and cash equivalents. We believe that our existing cash balances and operating cash flows will provide sufficient resources to fund our obligations and anticipated liquidity requirements over the next 12 months.
We expect to utilize cash flow from operations and cash on hand as funding sources, as well as potentially engage in future refinancing transactions to further extend the maturities of our debt obligations. The timing and terms of any refinancing transactions will be subject to market conditions among other considerations.
As potential acquisitions or dispositions arise, we actively review such transactions against our objectives including, among other considerations, improving our operational efficiency, geographic clustering of assets, product development or technology capabilities of our business and achieving appropriate strategic objectives, and we may participate in such transactions to the extent we believe these possibilities present attractive opportunities. However, there can be no assurance that we will actually complete any acquisitions or dispositions, or that any such transactions will be material to our operations or results.
Our ability to fund operations, make capital expenditures, repay debt obligations and make future acquisitions and strategic investments depends on future operating performance and cash flows, which are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.
Historical Operating, Investing, and Financing Activities
Operating Activities
Net cash provided by operating activities was $33.2 million for the three months ended March 31, 2024 from $32.6 million compared to the three months ended March 31, 2023. The increase is primarily due to timing differences of our receivables and payables.
Investing Activities
Net cash used in investing activities was $72.5 million for the three months ended March 31, 2024 compared to $60.1 million for the three months ended March 31, 2023. The increase is primarily attributable to an increase in construction projects related to our market expansion initiatives.
We have ongoing capital expenditure requirements related to the maintenance, expansion and technological upgrades of our network. Capital expenditures are funded primarily through a combination of cash on hand and cash flow from operations. Our capital expenditures were $72.5 million and $60.2 million for the three months ended March 31, 2024 and 2023, respectively. The $12.3 million increase in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 is related to increases in costs related to our market expansion initiatives in locations adjacent and nonadjacent to our existing network.
22
The following table sets forth additional information regarding our capital expenditures for the periods presented:
|
|
Three months ended |
||||
|
|
March 31, |
||||
|
|
2024 |
|
2023 |
||
|
|
(in millions) |
||||
Capital Expenditures |
|
|
|
|
|
|
Scalable infrastructure(1) |
|
$ |
32.6 |
|
$ |
17.9 |
Customer premise equipment(2) |
|
|
18.6 |
|
|
16.2 |
Line extensions(3) |
|
|
11.1 |
|
|
16.0 |
Support capital and other(4) |
|
|
10.2 |
|
|
10.1 |
Total |
|
$ |
72.5 |
|
$ |
60.2 |
Capital expenditures included in total related to: |
|
|
|
|
|
|
Greenfields(5) |
|
$ |
43.1 |
|
$ |
20.2 |
Edge-outs(6) |
|
$ |
1.7 |
|
$ |
4.2 |
Business services(7) |
|
$ |
2.2 |
|
$ |
3.9 |
(1) | Scalable infrastructure includes costs, not directly related to customer acquisition activity, to support new customer growth and provide service enhancements (e.g., headend equipment). |
(2) | Customer premise equipment, includes equipment and installation costs incurred to deliver services to residential and business services customers. CPE includes the costs of acquiring and installing our set-top boxes and modems, as well as the cost of customer connections to our network. |
(3) | Line extensions include costs associated with new home development within our footprint and edge-outs (e.g., fiber / coaxial cable, amplifiers, electronic equipment, make-ready and design engineering). |
(4) | Support capital and other includes costs to modify or replace existing HFC network, including enhancements, and all other costs to support day-to-day operations, including land, buildings, vehicles, office equipment, tools and test equipment. |
(5) | Greenfields represent costs associated with building our fiber technology network in locations nonadjacent to our existing network. |
(6) | Edge-outs represent costs to extend our network into new adjacent service areas, including the associated CPE. |
(7) | Business services represent costs associated with the build-out of our network to support business services customers, including the associated CPE. |
Financing Activities
Net cash provided by financing activities was $35.1 million for the three months ended March 31, 2024 and $17.7 million for the three months ended March 31, 2023. The increase is due to a reduction in purchases of treasury stock, offset by the reduction in net borrowings during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk is limited and primarily related to fluctuating interest rates associated with our variable rate indebtedness under our Senior Secured Credit Facility. As of March 31, 2024, borrowings under our Term B Loans and Revolving Credit Facility bear interest at SOFR plus 3.00% and SOFR plus 2.75%, respectively. We manage the impact of interest rate changes on earnings and operating cash flows by entering into derivative instruments to protect against increases in the interest rates on our variable rate debt. We use interest rate swaps, where we receive variable rate amounts in exchange for fixed rate payments. As of March 31, 2024, after considering our interest rate swaps, approximately 48% of our Senior Secured Credit Facility is still variable rate debt. A hypothetical 100 basis point (1%) change in SOFR interest rates (based on the interest rates in effect under our Senior Secured Credit Facility as of March 31, 2024) would result in an annual interest expense change of up to approximately $4.5 million on our Senior Secured Credit Facility.
23
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer (together, the “Certifying Officers”), as appropriate, to allow for timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Our management, with the participation of the Certifying Officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2024. Based on these evaluations, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures required by paragraph (b) of Rule 13a-15 or 15d-15 were effective as of March 31, 2024.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the first quarter of 2024.
24
PART II
Item 1. Legal Proceedings
Refer to Note 13 – Commitments and Contingencies for a discussion of the Company’s legal proceedings.
Item 1A. Risk Factors
Our Annual Report on Form 10-K for the year ended December 31, 2023 includes “Risk Factors” under Item 1A of Part 1. There have been no material changes to the risk factors set forth therein.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities by the Issuer
The following table presents WOW’s purchases of equity securities completed during the first quarter of 2024 (in millions, except share and per share amounts):
|
|
|
|
|
|
|
|
|
Approximate Dollar Value of |
|
|
|
|
|
|
|
|
Total Number of Shares |
|
Shares that May Yet be |
|
|
|
Number of Shares |
|
Average Price |
|
Purchased as Part of Publicly |
|
Purchased Under the Plans |
||
Period |
|
Purchased (1) |
|
Paid per Share |
|
Announced Plans or Programs |
|
or Programs (in millions) |
||
January 1 - 31, 2024 |
|
7,799 |
|
$ |
3.68 |
|
— |
|
$ |
— |
February 1 - 29, 2024 |
|
30,836 |
|
$ |
3.85 |
|
— |
|
$ |
— |
March 1 - 31, 2024 |
|
301,256 |
|
$ |
3.69 |
|
— |
|
$ |
— |
(1) | Represents shares withheld from employees for the payment of taxes upon the vesting of restricted stock awards for the months of January, February, and March 2024, respectively. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Arrangements
During the three months ended March 31, 2024, none of the Company's directors or Section 16 officers amended, adopted or terminated (i) any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or (ii) any non-Rule 10b5-1 trading arrangement.
.
25
Item 6. Exhibits
Exhibit |
|
Exhibit Description |
|
|
|
|
Amended and Restated Certificate of Incorporation of WideOpenWest, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1/A (File No. 333-216894) filed on May 15, 2017) |
|
|
Amended and Restated Bylaws of WideOpenWest, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Registration Statement on Form S-1/A (File No. 333-216894) filed on May 15, 2017) |
|
|
Certification of Chief Executive Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
Certification of Chief Financial Officer pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
101 |
|
The following financial information from WideOpenWest, Inc.’s Quarterly Report on Form 10-Q for the three months ended March 31, 2024, filed with the Securities and Exchange Commission on May 7, 2024, formatted in iXBRL (inline eXtensible Business Reporting Language) includes: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Changes in Stockholders’ Equity; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to the Condensed Consolidated Financial Statements. |
104 |
|
Cover Page, formatted in iXBRL and contained in Exhibit 101. |
* |
Filed herewith. |
26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
WIDEOPENWEST, INC. |
|
|
|
|
May 7, 2024 |
By: |
/s/ TERESA ELDER |
|
|
Teresa Elder |
|
|
Chief Executive Officer |
|
|
|
|
By: |
/s/ JOHN REGO |
|
|
John Rego |
|
|
Chief Financial Officer |
27
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, Teresa Elder, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of WideOpenWest, Inc. for the quarterly period ended March 31, 2024;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 7, 2024 |
By: |
/s/ TERESA ELDER |
|
|
Teresa Elder |
|
|
Chief Executive Officer |
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to 15 U.S.C. Section 10A, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
I, John Rego, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of WideOpenWest, Inc. for the quarterly period ended March 31, 2024; |
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
May 7, 2024 |
By: |
/s/ JOHN REGO |
|
|
John Rego |
|
|
Chief Financial Officer |
Exhibit 32.1
Certification of Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of WideOpenWest, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Teresa Elder, Chief Executive Officer and John Rego, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
May 7, 2024 |
By: |
/s/ TERESA ELDER |
|
|
Teresa Elder |
|
|
Chief Executive Officer |
|
|
|
|
By: |
/s/ JOHN REGO |
|
|
John Rego |
|
|
Chief Financial Officer |