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Frontier Reports First-Quarter 2024 Results

  • Delivered year-over-year revenue growth for the first quarter since 2015
  • Accelerated Adjusted EBITDA growth to 5% year-over-year
  • Accelerated fiber broadband revenue growth of 24% year-over-year driven by strong customer and ARPU growth

Frontier Communications Parent, Inc. (NASDAQ: FYBR) (“Frontier”) reported first-quarter 2024 results today.

“We had a strong start to the year and achieved another major inflection point. We grew revenue year-over-year for the first time since 2015 and delivered our third consecutive quarter of Adjusted EBITDA growth,” said Nick Jeffery, President and Chief Executive Officer of Frontier. “We also grew our customer base and increased ARPU in the quarter, resulting in a 24% increase in fiber broadband revenue.”

Jeffery continued, “Our first-quarter results perfectly illustrate how our fast-growing fiber business is systematically improving our financial performance. Thanks to our team’s relentless execution, we’re in a strong position to keep adding value to our customers and deliver accelerated growth in 2024.”

First-Quarter 2024 Highlights

  • Added 322,000 fiber passings to reach 6.8 million total locations passed with fiber
  • Added 88,000 fiber broadband customers, resulting in fiber broadband customer growth of 18% year-over-year
  • Revenue of $1.46 billion increased 1.5% year-over-year as growth in fiber-based products was partly offset by declines in copper-based products
  • Operating income of $90 million and net income of $1 million
  • Adjusted EBITDA of $547 million increased 5.4% year-over-year driven by revenue growth and cost savings1
  • Cash capital expenditures of $666 million plus $363 million of vendor financing payments, for total cash capital investment of $1.0 billion2
  • Generated net cash from operations of $335 million

First-Quarter 2024 Consumer Results

  • Consumer revenue of $787 million increased 3.4% year-over-year as growth in fiber was partly offset by declines in copper
  • Consumer fiber revenue of $505 million increased 12.7% year-over-year as growth in broadband was partly offset by declines in video and voice
  • Consumer fiber broadband revenue of $375 million increased 25.8% year-over-year driven by growth in both fiber broadband customers and ARPU
  • Consumer fiber broadband customer net additions of 85,000 resulted in consumer fiber broadband customer growth of 18.3% year-over-year
  • Consumer fiber broadband customer churn of 1.24% compared to 1.20% in the first quarter of 2023
  • Consumer fiber broadband ARPU of $65.18 increased 6.1% year-over-year

First-Quarter 2024 Business and Wholesale Results

  • Business and Wholesale revenue of $659 million was stable year-over-year as growth in fiber was largely offset by declines in copper
  • Business and Wholesale fiber revenue of $300 million increased 6.8% year-over-year as growth in data was partly offset by declines in voice
  • Business and Wholesale fiber broadband customer net additions of 3,000 resulted in Business and Wholesale fiber broadband customer growth of 11.9% year-over-year
  • Business and Wholesale fiber broadband customer churn of 1.32% compared to 1.43% in the first quarter of 20233
  • Business and Wholesale fiber broadband ARPU of $98.40 decreased 3.5% year-over-year4

Capital Structure

As of March 31, 2024, Frontier had total liquidity of $2.6 billion, including a cash and short-term investments balance of approximately $1.5 billion, $0.6 billion of available borrowing capacity on its revolving credit facility, and $0.5 billion of available borrowing capacity on its variable funding notes facility, subject to customary drawing conditions. Frontier’s net leverage ratio on March 31, 2024, was approximately 4.5x5. Frontier has no long-term debt maturities prior to 2027.

2024 Outlook6

Frontier today reaffirmed all operational and financial expectations for 2024.

Frontier’s guidance for the full-year 2024 is:

  • Adjusted EBITDA of $2.20 - $2.25 billion1
  • Fiber passing additions of 1.3 million
  • Cash capital investment of $3.00 - $3.20 billion2
  • Cash taxes of approximately $20 million
  • Net cash interest payments of approximately $750 million
  • Pension and OPEB expense of approximately $40 million (net of capitalization)
  • Cash pension and OPEB contributions of approximately $125 million

Conference Call Information

As previously announced, Frontier will host a conference call to discuss first-quarter 2024 results today, May 3, 2024, beginning at 8:30 a.m. Eastern Time.

The conference call webcast and presentation materials are accessible through Frontier’s Investor Relations website and will remain archived at this location.

About Frontier

Frontier (NASDAQ: FYBR) is the largest pure-play fiber provider in the U.S. Driven by our purpose, Building Gigabit America®, we deliver blazing-fast broadband connectivity that unlocks the potential of millions of consumers and businesses. For more information, visit www.frontier.com.

Non-GAAP Financial Measures

Frontier uses certain non-GAAP financial measures in evaluating its performance, including EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, operating free cash flow, adjusted operating expenses, and net leverage ratio, each of which is described below. Management uses these non-GAAP financial measures internally to (i) assist in analyzing Frontier's underlying financial performance from period to period, (ii) analyze and evaluate strategic and operational decisions, (iii) establish criteria for compensation decisions, and (iv) assist in the understanding of Frontier's ability to generate cash flow and, as a result, to plan for future capital and operational decisions. Management believes that the presentation of these non-GAAP financial measures provides useful information to investors regarding Frontier’s financial condition and results of operations because these measures, when used in conjunction with related GAAP financial measures, (i) provide a more comprehensive view of Frontier’s core operations and ability to generate cash flow, (ii) provide investors with the financial analytical framework upon which management bases financial, operational, compensation, and planning decisions, and (iii) present measurements that investors and rating agencies have indicated to management are useful to them in assessing Frontier and its results of operations.

A reconciliation of these measures to the most comparable financial measures calculated and presented in accordance with GAAP is included in the accompanying tables. These non-GAAP financial measures are not measures of financial performance or liquidity under GAAP, nor are they alternatives to GAAP measures, and they may not be comparable to similarly titled measures of other companies.

EBITDA is defined as net income (loss) less income tax expense (benefit), interest expense, investment and other income (loss), pension settlement costs, reorganization items, and depreciation and amortization. EBITDA margin is calculated by dividing EBITDA by total revenue.

Adjusted EBITDA is defined as EBITDA, as described above, adjusted to exclude certain pension/OPEB expenses, restructuring costs and other charges, stock-based compensation, and certain other non-recurring items. Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue.

Management uses EBITDA, EBITDA margin, Adjusted EBITDA and Adjusted EBITDA margin to assist it in comparing performance from period to period and as measures of operational performance. Management believes that these non-GAAP measures provide useful information for investors in evaluating Frontier’s operational performance from period to period because they exclude depreciation and amortization expenses related to investments made in prior periods and are determined without regard to capital structure or investment activities. By excluding capital expenditures, debt repayments and dividends, among other factors, these non-GAAP financial measures have certain shortcomings. Management compensates for these shortcomings by utilizing these non-GAAP financial measures in conjunction with the comparable GAAP financial measures.

Management defines operating free cash flow as net cash provided from operating activities less capital expenditures, less payments on vendor financing related to capital expenditures. Management uses operating free cash flow to assist it in comparing liquidity from period to period and to obtain a more comprehensive view of Frontier’s core operations and ability to generate cash flow. Management believes that this non-GAAP measure is useful to investors in evaluating cash available to service debt and pay dividends. This non-GAAP financial measure has certain shortcomings; it does not represent the residual cash flow available for discretionary expenditures, as items such as debt repayments are not deducted in determining such measure. Management compensates for these shortcomings by utilizing this non-GAAP financial measure in conjunction with the comparable GAAP financial measure.

Adjusted operating expenses is defined as operating expenses adjusted to exclude depreciation and amortization, restructuring and other charges, certain pension/OPEB expenses, stock-based compensation, and certain other non-recurring items. Investors have indicated that this non-GAAP measure is useful in evaluating Frontier’s performance.

Net leverage ratio is calculated as net debt (total debt less cash and cash equivalents and short-term investments) divided by Adjusted EBITDA for the most recent four quarters. Investors have indicated that this non-GAAP measure is useful in evaluating Frontier’s debt levels.

The information in this press release should be read in conjunction with the financial statements and footnotes contained in Frontier’s documents filed with the U.S. Securities and Exchange Commission (the “SEC”).

Forward-Looking Statements

This release contains "forward-looking statements" related to future events, including our 2024 outlook and guidance. Forward-looking statements address our expectations or beliefs concerning future events, including, without limitation, future operating and financial performance, our ability to implement our growth strategy our ability to comply with the covenants in the agreements governing our indebtedness, our capital expenditures, the containment of the impact on our operations of the recently disclosed cybersecurity incident, and other matters. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and performance and contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “may,” “will,” “would,” or “target.” Forward-looking statements by their nature address matters that are, to different degrees, uncertain. A wide range of factors could materially affect future developments and performance, including but not limited to: our significant indebtedness, our ability to incur substantially more debt in the future, and covenants in the agreements governing our current indebtedness that may reduce our operating and financial flexibility; declines in Adjusted EBITDA and revenue relative to historical levels that we are unable to offset; economic uncertainty, volatility in financial markets, and rising interest rates could limit our ability to access capital or increase the cost of capital needed to fund business operations, including our fiber expansion plans; our ability to successfully implement strategic initiatives, including our fiber buildout and other initiatives to enhance revenue and realize productivity improvements; our ability to secure necessary construction resources, materials and permits for our fiber buildout initiative in a timely and cost-effective manner; inflationary pressures on costs, including tight labor markets, increased fuel and electricity costs and potential disruptions in our supply chain, which could adversely impact our financial condition or results of operations and hinder our fiber expansion plans; our ability to effectively manage our operations, operating expenses, capital expenditures, debt service requirements and cash paid for income taxes and liquidity; the impact of potential information technology or data security breaches or other cyber-attacks or other disruptions, including the recently disclosed unauthorized access by a third party to portions of our information technology environment; the impact of laws and regulations relating to the handling of privacy and data protection; competition from cable, wireless carriers, satellite providers, wireline carriers, fiber “overbuilders” and over the top companies, and the risk that we will not respond on a timely or profitable basis; our ability to successfully adjust to changes in the communications industry, including the effects of technological changes and competition on our capital expenditures, products and service offerings; our ability to retain or attract new customers and to maintain relationships with existing customers, including wholesale customers; our reliance on a limited number of key supplies and vendors; declines in revenue from our voice services, switched and nonswitched access and video and data services that we cannot stabilize or offset with increases in revenue from other products and services; our ability to secure, continue to use or renew intellectual property and other licenses used in our business; our ability to hire or retain key personnel; our ability to dispose of certain assets or asset groups or to make acquisition of certain assets on terms that are attractive to us, or at all; the effects of changes in the availability of federal and state universal service funding or other subsidies to us and our competitors and our ability to obtain future subsidies; our ability to comply with the applicable CAF II and RDOF requirements and the risk of penalties or obligations to return certain CAF II and RDOF funds; our ability to defend against litigation or government investigations and potentially unfavorable results from current pending and future litigation or investigations; our ability to comply with applicable federal and state consumer protection requirements; the effects of governmental legislation and regulation on our business, including costs, disruptions, possible limitations on operating flexibility and changes to the competitive landscape resulting from such legislation or regulation; the impact of regulatory, investigative and legal proceedings and legal compliance risks; our ability to effectively manage service quality in the states in which we operate and meet mandated service quality metrics or regulatory requirements; the effects of changes in income tax rates, tax laws, regulations or rulings, or federal or state tax assessments, including the risk that such changes may benefit our competitors more than us, as well as potential future decreases in the value of our deferred tax assets; the effects of changes in accounting policies or practices; our ability to successfully renegotiate union contracts; the effects of increased medical expenses and pension and postemployment expenses; changes in pension plan assumptions, interest rates, discount rates, regulatory rules and/or the value of our pension plan assets; the impact of adverse changes in economic, political and market conditions in the areas that we serve, the U.S. and globally, including but not limited to, disruption in our supply chain, inflation in pricing for key materials or labor, or other adverse changes resulting from epidemics, pandemics and outbreaks of contagious diseases, natural disasters, economic or political instability, terrorist attacks and wars, including the ongoing war in Ukraine and the Israel-Hamas war, or other adverse widespread developments; potential adverse impacts of climate change and increasingly stringent environmental laws, rules and regulations, and customer expectations and other environmental liabilities; market overhang due to substantial common stock holdings by our former creditors; certain provisions of Delaware law and our certificate of incorporation that may prevent efforts by our stockholders to change the direction or management of our company; and certain other factors set forth in our other filings with the SEC. This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative and is not intended to be exhaustive. You should consider these important factors, as well as the risks and other factors contained in Frontier’s filings with the SEC, including our most recent reports on Form 10-K and Form 10-Q and our Form 8-K filed on April 18, 2024. These risks and uncertainties may cause actual future results to be materially different than those expressed in such forward-looking statements. We do not intend, nor do we undertake any duty, to update any forward-looking statements.

Frontier Communications Parent, Inc.

Unaudited Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

For the

 

 

three months ended

 

three months ended

 

 

March 31,

 

March 31,

($ in millions and shares in thousands, except per share amounts)

 

2024

 

2023

 

 

 

Statements of Operations Data

 

 

 

 

 

 

Revenue

 

$

1,462

 

$

1,440

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Cost of service

 

 

522

 

 

542

Selling, general, and administrative expenses

 

 

428

 

 

417

Depreciation and amortization

 

 

388

 

 

330

Restructuring costs and other charges

 

 

34

 

 

8

Total operating expenses

 

 

1,372

 

 

1,297

 

 

 

 

 

 

 

Operating income

 

 

90

 

 

143

 

 

 

 

 

 

 

Investment and other income, net

 

 

112

 

 

2

Interest expense

 

 

(199)

 

 

(141)

 

 

 

 

 

 

 

Income before income taxes

 

 

3

 

 

4

Income tax expense

 

 

2

 

 

1

 

 

 

 

 

 

 

Net income

 

$

1

 

$

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - basic

 

 

246,301

 

 

245,081

Weighted average shares outstanding - diluted

 

 

247,040

 

 

246,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic net earnings per common share

 

$

0.00

 

$

0.01

Diluted net earnings per common share

 

$

0.00

 

$

0.01

 

 

 

 

 

 

 

Other Financial Data:

 

 

 

 

 

 

Capital expenditures

 

$

666

 

$

1,154

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

March 31,

 

 

December 31,

 

 

 

March 31,

($ in millions)

 

2024

 

 

2023

 

 

 

2023

 

 

 

 

 

 

 

 

 

 

Selected Statement of Income Data

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Data and Internet services

 

$

947

 

 

$

897

 

 

 

$

862

Voice services

 

 

321

 

 

 

329

 

 

 

 

356

Video services

 

 

94

 

 

 

97

 

 

 

 

117

Other

 

 

84

 

 

 

86

 

 

 

 

83

Revenue from contracts with customers

 

 

1,446

 

 

 

1,409

 

 

 

 

1,418

Subsidy and other revenue

 

 

16

 

 

 

17

 

 

 

 

22

Total revenue

 

$

1,462

 

 

$

1,426

 

 

 

$

1,440

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

787

 

 

$

774

 

 

 

$

761

Business and wholesale

 

 

659

 

 

 

635

 

 

 

 

657

Revenue from contracts with customers

 

$

1,446

 

 

$

1,409

 

 

 

$

1,418

 

 

 

 

 

 

 

 

 

 

 

 

 

Fiber

 

$

805

 

 

$

762

 

 

 

$

729

Copper

 

 

641

 

 

 

647

 

 

 

 

689

Revenue from contracts with customers

 

$

1,446

 

 

$

1,409

 

 

 

$

1,418

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Operating Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the three months ended

 

 

 

March 31, 2024

 

December 31, 2023

 

March 31, 2023

 

 

 

 

 

 

 

 

 

Broadband customer metrics (1)

 

 

 

 

 

 

 

Broadband customers (in thousands)

 

 

2,974

 

 

 

2,943

 

 

 

2,894

 

 

Net customer additions

 

 

31

 

 

 

30

 

 

 

26

 

 

 

 

 

 

 

 

 

 

Consumer customer metrics

 

 

 

 

 

 

 

Customers (in thousands)

 

 

3,140

 

 

 

3,129

 

 

 

3,140

 

 

Net customer additions

 

 

11

 

 

 

11

 

 

 

7

 

 

Average monthly consumer

 

 

 

 

 

 

 

revenue per customer

 

$

83.65

 

 

$

82.54

 

 

$

80.87

 

 

Customer monthly churn

 

 

1.47

%

 

 

1.43

%

 

 

1.43

%

 

 

 

 

 

 

 

 

 

Employees

 

 

13,227

 

 

 

13,297

 

 

 

14,523

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts presented include related metrics for our wholesale customers.

 

Frontier Communications Parent, Inc.

Condensed Consolidated Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

($ in millions)

 

March 31, 2024

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,296

 

 

 

$

1,125

Short-term investments

 

 

225

 

 

 

 

1,075

Accounts receivable, net

 

 

447

 

 

 

 

446

Other current assets

 

 

113

 

 

 

 

135

Total current assets

 

 

2,081

 

 

 

 

2,781

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

14,296

 

 

 

 

13,933

Other assets

 

 

3,820

 

 

 

 

3,979

Total assets

 

$

20,197

 

 

 

$

20,693

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

$

15

Accounts payable and other current liabilities

 

 

1,925

 

 

 

 

2,260

Total current liabilities

 

 

1,940

 

 

 

 

2,275

 

 

 

 

 

 

 

 

 

Deferred income taxes and other liabilities

 

 

1,758

 

 

 

 

1,893

Long-term debt

 

 

11,240

 

 

 

 

11,246

Equity

 

 

5,259

 

 

 

 

5,279

Total liabilities and equity

 

$

20,197

 

 

 

$

20,693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

March 31, 2024

 

 

 

 

 

Leverage Ratio

 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

Long-term debt due within one year

 

$

15

 

 

 

 

 

Long-term debt

 

 

11,240

 

 

 

 

 

Total debt

 

$

11,255

 

 

 

 

 

Less: Cash and cash equivalents

 

 

(1,296)

 

 

 

 

 

Short-term investments

 

 

(225)

 

 

 

 

 

Net debt

 

$

9,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Adjusted EBITDA - last 4 quarters

 

$

2,155

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Leverage Ratio

 

 

4.5x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Frontier Communications Parent, Inc.

Unaudited Consolidated Cash Flow Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

March 31, 2024

 

March 31, 2023

($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) operating activities:

 

 

 

 

 

 

 

Net income

 

$

1

 

$

3

 

Adjustments to reconcile net loss to net cash provided from

 

 

 

 

 

 

 

(used by) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

388

 

 

330

 

Pension/OPEB special termination benefit enhancements

 

 

7

 

 

-

 

Stock-based compensation

 

 

26

 

 

24

 

Amortization of premium

 

 

(5)

 

 

(7)

 

Bad debt expense

 

 

9

 

 

7

 

Other adjustments

 

 

4

 

 

1

 

Deferred income taxes

 

 

-

 

 

-

 

Change in accounts receivable

 

 

(9)

 

 

2

 

Change in long-term pension and other postretirement liabilities

 

 

(146)

 

 

(7)

 

Change in accounts payable and other liabilities

 

 

27

 

 

30

 

Change in prepaid expenses, income taxes, and other assets

 

 

33

 

 

6

 

Net cash provided from operating activities

 

 

335

 

 

389

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(666)

 

 

(1,154)

 

Purchases of short-term investments (1)

 

 

-

 

 

(225)

 

Sale of short-term investments (1)

 

 

850

 

 

1,075

 

Other

 

 

2

 

 

-

 

Net cash provided from (used by) investing activities

 

 

186

 

 

(304)

 

 

 

 

 

 

 

 

 

Cash flows provided from (used by) financing activities:

 

 

 

 

 

 

 

Long-term debt payments

 

 

(4)

 

 

(4)

 

Proceeds from long-term debt borrowings

 

 

-

 

 

750

 

Payments of vendor financing

 

 

(363)

 

 

-

 

Financing costs paid

 

 

-

 

 

(13)

 

Finance lease obligation payments

 

 

(7)

 

 

(5)

 

Taxes paid on behalf of employees for shares withheld

 

 

(43)

 

 

(3)

 

Other

 

 

(6)

 

 

-

 

Net cash provided from (used by) financing activities

 

 

(423)

 

 

725

 

 

 

 

 

 

 

 

 

Increase (Decrease) in cash, cash equivalents, and restricted cash

 

 

98

 

 

810

 

Cash, cash equivalents, and restricted cash at the beginning of the period

 

 

1,239

 

 

322

 

 

 

 

 

 

 

 

 

Cash, cash equivalents, and restricted cash at the end of the period

 

$

1,337

 

$

1,132

 

 

 

 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

Interest

 

$

149

 

$

83

 

Income tax payments, net

 

$

13

 

$

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts represent cash movement to/from short-term investments. Given the long-term nature of the fiber build, we have invested cash in short-term investments to improve interest income while preserving funding flexibility.

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE A

Frontier Communications Parent, Inc.

Unaudited Financial Data

Reconciliation of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

 

March 31,

 

December 31,

 

March 31,

($ in millions)

 

 

2024

 

2023

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

$

1

 

$

17

 

$

3

Add back (subtract):

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

 

 

2

 

 

87

 

 

1

Interest expense

 

 

 

199

 

 

193

 

 

141

Investment and other income, net

 

 

 

(112)

 

 

(177)

 

 

(2)

Operating income

 

 

 

90

 

 

120

 

 

143

Depreciation and amortization

 

 

 

388

 

 

375

 

 

330

EBITDA

 

 

$

478

 

$

495

 

$

473

 

 

 

 

 

 

 

 

 

 

 

Add back:

 

 

 

 

 

 

 

 

 

 

Pension/OPEB expense

 

 

$

9

 

$

10

 

$

11

Restructuring costs and other charges

 

 

 

34

 

 

25

 

 

8

Stock-based compensation

 

 

 

26

 

 

27

 

 

24

Storm-related costs

 

 

 

-

 

 

-

 

 

3

Legal recoveries

 

 

 

-

 

 

(8)

 

 

-

Adjusted EBITDA

 

 

$

547

 

$

549

 

$

519

 

 

 

 

 

 

 

 

 

 

 

EBITDA margin

 

 

 

32.7%

 

 

34.7%

 

 

32.8%

Adjusted EBITDA margin

 

 

 

37.4%

 

 

38.5%

 

 

36.0%

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

 

 

Net cash provided from

 

 

 

 

 

 

 

 

 

 

operating activities

 

 

$

335

 

$

296

 

$

389

Capital expenditures

 

 

 

(717)

 

 

(329)

 

 

(1,154)

Payment of vendor financing- capital

 

 

 

 

 

 

 

 

 

 

expenditures

 

 

 

(312)

 

 

(4)

 

 

-

Operating free cash flow

 

 

$

(694)

 

$

(37)

 

$

(765)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE B

Frontier Communications Parent, Inc.

Unaudited Consolidated Financial Data

Reconciliation of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

March 31,

 

December 31,

 

March 31,

($ in millions)

 

2024

 

2023

 

2023

Adjusted Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

$

1,372

 

$

1,306

 

$

1,297

 

 

 

 

 

 

 

 

 

 

Subtract:

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

388

 

 

375

 

 

330

Pension/OPEB expense

 

 

9

 

 

10

 

 

11

Restructuring costs and other charges

 

 

34

 

 

25

 

 

8

Stock-based compensation

 

 

26

 

 

27

 

 

24

Storm-related costs

 

 

-

 

 

-

 

 

3

Legal recoveries

 

 

-

 

 

(8)

 

 

-

Adjusted operating expenses

 

$

915

 

$

877

 

$

921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCHEDULE C

Frontier Communications Parent, Inc.

Selected Financial and Operating Data (1)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the three months ended

 

 

 

 

 

March 31, 2024

 

December 31, 2023

 

 

March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

Broadband Revenue ($ in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

Fiber

 

 

$

414

 

$

391

 

 

$

334

 

 

Copper

 

 

 

155

 

 

159

 

 

 

173

 

 

Total

 

 

$

569

 

$

550

 

 

$

507

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Fiber Passings (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

Base Fiber Passings

 

 

 

 

3.2

 

 

3.2

 

 

 

3.2

 

Total Fiber Passings

 

 

 

 

6.8

 

 

6.5

 

 

 

5.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated Broadband Fiber % Penetration

 

 

 

 

 

 

 

 

 

 

 

 

Base Fiber Penetration

 

 

 

 

44.9%

 

 

44.5%

 

 

 

43.5%

 

Total Fiber Penetration

 

 

 

 

30.7%

 

 

30.9%

 

 

 

32.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Customers, end of period (in thousands)

 

 

 

 

 

 

Consumer

Fiber

 

 

 

1,963

 

 

1,878

 

 

 

1,659

 

 

Copper

 

 

 

771

 

 

822

 

 

 

987

 

 

Total

 

 

 

2,734

 

 

2,700

 

 

 

2,646

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business + Wholesale (2)

Fiber

 

 

 

132

 

 

129

 

 

 

118

 

 

Copper

 

 

 

108

 

 

114

 

 

 

130

 

 

Total

 

 

 

240

 

 

243

 

 

 

248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Net Adds (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

Fiber

 

 

 

85

 

 

81

 

 

 

84

 

 

Copper

 

 

 

(51)

 

 

(48)

 

 

 

(56)

 

 

Total

 

 

 

34

 

 

33

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business + Wholesale (2)

Fiber

 

 

 

3

 

 

3

 

 

 

4

 

 

Copper

 

 

 

(6)

 

 

(6)

 

 

 

(6)

 

 

Total

 

 

 

(3)

 

 

(3)

 

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Churn

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

Fiber

 

 

 

1.24%

 

 

1.20%

 

 

 

1.20%

 

 

Copper

 

 

 

1.93%

 

 

1.86%

 

 

 

1.71%

 

 

Total

 

 

 

1.45%

 

 

1.41%

 

 

 

1.40%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business + Wholesale (2)

Fiber

 

 

 

1.32%

 

 

1.17%

 

 

 

1.43%

 

 

Copper

 

 

 

2.01%

 

 

1.73%

 

 

 

1.88%

 

 

Total

 

 

 

1.64%

 

 

1.44%

 

 

 

1.67%

Broadband ARPU

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

Fiber

 

 

$

65.18

 

$

64.16

 

 

$

61.44

 

 

Copper

 

 

 

56.16

 

 

54.22

 

 

 

48.88

 

 

Total

 

 

$

62.53

 

$

61.02

 

 

$

56.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business + Wholesale (2)

Fiber

 

 

$

98.40

 

$

98.86

 

 

$

101.92

 

 

Copper

 

 

 

60.81

 

 

59.87

 

 

 

60.59

 

 

Total

 

 

$

81.07

 

$

80.17

 

 

$

79.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation: Broadband ARPU

 

 

 

 

 

 

 

 

 

 

 

 

Consumer Fiber Broadband ARPU

 

 

$

65.18

 

$

64.16

 

 

$

61.44

 

Gift card impact

 

 

 

0.17

 

 

0.17

 

 

 

1.68

 

Adjusted Consumer Fiber Broadband ARPU

 

 

$

65.35

 

$

64.33

 

 

$

63.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Certain operational metrics, including passings, penetration, Base Fiber penetration, ARPU and churn are defined in the accompanying Trending Schedule available at Frontier's website https://investor.frontier.com.

(2) Business + Wholesale customers include our small, medium business, larger enterprise (SME) customers and wholesale subscribers.

_______________________________

1
Adjusted EBITDA is a non-GAAP measure of performance. See “Non-GAAP Measures” for a description of this measure and its calculation. See Schedule A for a reconciliation of Adjusted EBITDA to net income.

2 Cash capital investment includes capital expenditures and vendor financing payments for capital spend.

3 Business and Wholesale churn methodology includes wholesale, excluding circuits or fiber-to-the-tower churn.

4 Business and Wholesale ARPU methodology includes wholesale, excluding circuits or fiber-to-the-tower ARPU.

5 Net leverage ratio is a non-GAAP measure. See “Non-GAAP Measures” and the condensed consolidated balance sheet data contained herein for a description and calculation of net leverage ratio.

6 The operational and financial guidance expectations for 2024 comprise forward-looking statements related to future events. See “Forward-Looking Statements” below. Projected GAAP financial measures and reconciliations of projected non-GAAP financial measures are not provided herein because such GAAP financial measures are not available on a forward-looking basis and such reconciliations could not be derived without unreasonable effort.

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