On November 7, 2023, Consolidated Communications Holdings Inc (CNSL, Financial) released its third-quarter financial results. The company reported a net loss of $69.2 million in Q3 2023, compared to a net income of $282.3 million in Q3 2022. This significant shift was primarily due to increased operating expenses and higher interest on the term loan.
Financial Performance
The company's operating expenses increased by $15.2 million compared to the previous year. This increase was largely due to increased severance costs related to the previously announced business simplification and cost savings initiatives. Additionally, higher costs were incurred related to professional fees for customer service and process improvement initiatives. However, these higher operating expenses were partly offset by the impact of the divestiture of the Kansas City operations on Nov. 30, 2022, lower video programming costs, and a decrease in required contributions to the federal and state Universal Service Funds.
Net interest expense for the quarter was $39.6 million, an increase of $7.5 million from the prior year. This increase was primarily due to higher interest on the term loan. As of Sept. 30, 2023, the weighted average cost of debt was 7.03%.
Capital Expenditures and Liquidity
Total committed capital expenditures for the quarter were $111.3 million, driven by 67,120 new fiber passings and third quarter fiber adds. As of Sept. 30, 2023, the company maintained liquidity with cash and short-term investments of approximately $90 million and $215 million of available borrowing capacity on the revolving credit facility, subject to certain covenants. The net debt leverage ratio for the trailing 12 months ended Sept. 30, 2023, was 6.15x.
Upcoming Acquisition
Consolidated Communications Holdings Inc (CNSL, Financial) has entered into an agreement to be acquired by Searchlight Capital Partners, L.P. and British Columbia Investment Management Corporation. The proposed transaction, which will result in Consolidated becoming a private company, is expected to close by the first quarter of 2025, subject to customary closing conditions, including receipt of regulatory approvals and approval of the holders of a majority of the voting power represented by the outstanding shares.
In light of the announced transaction, Consolidated will not host an earnings conference call and has withdrawn its 2023 outlook.
Explore the complete 8-K earnings release (here) from Consolidated Communications Holdings Inc for further details.
