Cable One Inc

Previous wording

We are a leading broadband communications provider committed to connecting customers and communities to what matters most. We strive to deliver an effortless experience by offering solutions that make our customers’ lives easier, and by relating to them personally as our neighbors and local business partners. Powered by our fiber-rich infrastructure, the Cable One family of brands provides residential customers with a wide array of connectivity and entertainment services, including Gigabit speeds, advanced Wi-Fi and video. For businesses ranging from small and mid-market up to enterprise, wholesale and carrier, we offer scalable, cost-effective solutions that enable businesses of all sizes to grow, compete and succeed. We believe the services we provide are critical to the development of new businesses and drive economic growth in the non-metropolitan, secondary and tertiary markets that we serve in 24 Western, Midwestern and Southern states. As of December 31,2023, approximately 74% of our customers were located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. We provided services to approximately 1.1 million residential and business customers out of approximately 2.8 million homes passed as of December 31, 2023. Of these customers, approximately 1,059,000 subscribed to data services, 142,000 subscribed to video services and 119,000 subscribed to voice services as of December 31, 2023.

Current wording

We are a leading broadband communications provider delivering exceptional service and enabling our customers to thrive and stay connected to what matters most. We strive to deliver an effortless experience by offering solutions that make our customers’ lives easier, and by relating to them personally as our neighbors and local business partners. Through Sparklight® and the associated Cable One family of brands, we are transforming the future of connectivity with a commitment to innovation, reliability and customer experience. We believe our robust infrastructure and cutting-edge technology keep our customers connected and help drive progress in education, business and everyday life. We believe the services we provide are critical to the development of new businesses and drive economic growth in the non-metropolitan, secondary and tertiary markets that we serve in 24 Western, Midwestern and Southern states. As of December 31,2024, approximately 74% of our customers were located in seven states: Arizona, Idaho, Mississippi, Missouri, Oklahoma, South Carolina and Texas. We provided services to approximately 1.1 million residential and business customers out of approximately 2.8 million passings as of December 31, 2024. Of these customers, approximately 1,055,000 subscribed to data services, 114,000 subscribed to video services and 106,000 subscribed to voice services as of December 31, 2024.

Previous wording

We generate substantially all of our revenues through three primary product lines. Ranked by share of our total revenues during 2023, they are residential data (58.4%), business services (data, voice and video provided to businesses: 18.1%) and residential video (15.4%). The profit margins, growth rates and/or capital intensity of these three primary product lines vary significantly due to competition, product maturity and relative costs.

Current wording

We generate substantially all of our revenues through three primary product lines. Ranked by share of our total revenues during 2024, they are residential data (58.6%), business data (14.4%) and residential video (14.1%). The profit margins, growth rates and/or capital intensity of these three primary product lines vary significantly due to competition, product maturity and relative costs.

Previous wording

In 2023, our Adjusted EBITDA margins for residential data and business services were approximately four andfive times greater, respectively, than for residential video. We define Adjusted EBITDA margin for a product line as Adjusted EBITDA attributable to that product line divided by revenue attributable to that product line (see “Use of Adjusted EBITDA” below for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure). This margin disparity is largely the result of significant programming costs and retransmission fees incurred to deliver residential video services, which in each of the last three years represented between 63% and 65% of total residential video revenues. Neither of our other primary product lines has direct costs representing as substantial a portion of revenues as programming costs and retransmission fees represent for residential video, and indirect costs are generally allocated on a per PSU basis.

Current wording

In 2024, our Adjusted EBITDA margins for residential data and business data are estimated to be approximately three andfour times greater, respectively, than for residential video. We define Adjusted EBITDA margin for a product line as Adjusted EBITDA attributable to that product line divided by revenue attributable to that product line (see “Use of Adjusted EBITDA” below for the definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure). This margin disparity is largely the result of significant programming costs and retransmission fees incurred to deliver residential video services, which in each of the last three years represented between 59% and 64% of total residential video revenues. Neither of our other primary product lines has direct costs representing as substantial a portion of revenues as programming costs and retransmission fees represent for residential video, and indirect costs are generally allocated on a per PSU basis.

Previous wording

We focus on growing our higher margin businesses, namely residential data and business services. Our strategy acknowledges the industry-wide trends of declining profitability of residential video services and declining revenues from residential voice services. The declining profitability of residential video services is due primarily to increasing programming costs and retransmission fees and competition from other streaming content providers, and the declining revenues from residential voice services are due primarily to the increasing use of wireless voice services instead of residential voice services. Separately, we have also historically focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with us, are less attracted by discounting, require less support and churn less. This strategy has focused on increasing Adjusted EBITDA, driving higher margins and delivering attractive levels of Adjusted EBITDA less capital expenditures over the long-term.

Current wording

We focus on growing our higher margin businesses, namely residential data and business data services. Our strategy acknowledges the industry-wide trends of declining profitability of video services and declining revenues from residential voice services. The declining profitability of residential video services is due primarily to increasing programming costs and retransmission fees and competition from other streaming content providers, and the declining revenues from residential voice services are due primarily to the increasing use of wireless voice services instead of residential voice services. Separately, we have also historically focused on retaining customers who are likely to produce higher relative value over the life of their service relationships with us, are less attracted by discounting, require less support and churn less, while more recently supplementing our growth by targeting a broader scope of incremental customers, including those who are more value-conscious. This strategy has focused on increasing Adjusted EBITDA, driving higher margins and delivering attractive levels of Adjusted EBITDA less capital expenditures over the long-term.

Previous wording

Excluding the effects of recently completed and any potential future acquisitions and divestitures, the trends described above have impacted, and are expected to further impact, our three primary product lines in the following ways:

Current wording

Excluding the effects of our recently completed and any potential future acquisitions and divestitures, the trends described above have impacted, and are expected to further impact, our three primary product lines in the following ways:

Previous wording

•Residential data. We have experienced significant growth in residential data customers and revenues since 2013 and we expect growth for this product line to continue over the long-term. We believe upgrades made in our broadband capacity, our ability to offer higher access speeds than many of our competitors, the reliability and flexibility of our data service offerings, our Wi-Fi support service and continuously growing data usage by consumers and their demand for higher speeds will enable us to continue to grow ARPU from our existing customers over the long-term and capture additional market share. Our broadband plant generally consists of a fiber-to-the-premises or HFC network with ample unused capacity, and we offer our data customers internet products at some of the fastest speeds available in our markets. During the fourth quarter of 2023, our average residential data customer used 705 Gigabytes of data per month, with nearly 25% of our customers using over 1 Terabyte of data per month. We believe that the capacity and reliability of our networks exceeds that of our competitors in most of our markets and best positions us to meet the continuously increasing consumption demands of customers. We experienced elevated growth in residential data revenues during the first two years of the COVID-19 pandemic, but have seen more subdued growth in recent quarters due in part to macroeconomic headwinds and continued competition in certain areas of our footprint.

Current wording

•Residential data. We have experienced significant growth in residential data customers and revenues since 2013 and we expect growth for this product line to continue over the long-term, supplemented by growth in related services, such as intelligent Wi-Fi and network security solutions, that we are focused on growing. We believe upgrades made in our broadband capacity, our ability to offer higher access speeds than many of our competitors, the reliability and flexibility of our data service offerings, our Wi-Fi offerings and continuously growing data usage by consumers and their demand for higher speeds will enable us to continue growing ARPU from our existing customers over the long-term and capture additional market share. Our broadband plant generally consists of a fiber or HFC network with ample unused capacity, and we offer our data customers internet products at some of the fastest speeds available in our markets. During the fourth quarter of 2024, our average residential data customer used 774 Gigabytes of data per month, with over 27% of our customers using over 1 Terabyte of data per month. We believe that the capacity and reliability of our networks is equal to or exceeds that of our competitors in most of our markets and best positions us to meet the continuously increasing consumption demands of customers.

Previous wording

•Business services. We have experienced significant growth in business data customers and revenues since 2013. We attribute this growth to our strategic focus on increasing sales to business customers and our efforts to attract enterprise business customers. We expect to experience continued growth in business data customers and revenues over the long-term. Margins for products sold to business customers have remained attractive, which we expect will continue.

Current wording

•Business data. We have experienced significant growth in business data customers and revenues since 2013. We attribute this growth to our strategic focus on increasing sales to business customers and our efforts to attract enterprise and wholesale business customers. We expect to experience continued growth in business data customers and revenues over the long-term. Margins for products sold to business customers have remained attractive, which we expect will continue.

Previous wording

•Residential video. Residential video service is an increasingly fragmented business, with programming costs and retransmission fees continuing to escalate in the face of a proliferation of streaming content alternatives. We intend to continue our strategy of focusing on the higher-margin businesses of residential data and business services while de-emphasizing our residential video business. As a result of our video strategy, we expect that residential video customers and revenues will continue to decline. We now offer Sparklight TV, an IPTV video service that allows customers with our Sparklight TV app to stream our video channels from the cloud. This transition from linear to IPTV video service enables us to reclaim bandwidth, freeing up network capacity to increase data speeds and capacity across our network.

Current wording

•Residential video. Residential video service is an increasingly fragmented business, with programming costs and retransmission fees continuing to escalate in the face of a proliferation of streaming content alternatives. We intend to continue our strategy of focusing on the higher-margin businesses of residential data and business data services while de-emphasizing our video business. As a result of our video strategy, we expect that residential video customers and revenues will continue to decline. We now offer Sparklight TV, an IPTV video service that allows customers with our Sparklight TV app to stream our video channels from the cloud. This transition from linear to IPTV video service enables us to reclaim bandwidth, freeing up network capacity to increase data speeds and capacity across our network.

Previous wording

We continue to experience increased competition, particularly from telephone companies; fiber, municipal and cooperative overbuilders; FWA data providers; and OTT video providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. In addition, a key objective of our capital allocation process is to invest in initiatives designed to drive revenue and Adjusted EBITDA expansion. Approximately 69% of our total capital expenditures since 2017 focused on infrastructure improvements intended to grow these measures. We continue to invest capital to, among other things, increase fiber density and coverage, expand our footprint, increase plant and data capacity, enhance network reliability and improve the customer experience. We have rolled out multi-Gigabit download data service to certain markets and currently offer Gigabit download data service to nearly all of our homes passed. We have also deployed DOCSIS 3.1, which, together with Sparklight TV, further increases our network capacity and enables future growth in our residential data and business services product lines.

Current wording

We continue to experience increased competition, particularly from telephone companies; fiber, municipal and cooperative overbuilders; cell phone internet providers; and OTT video providers. Because of the levels of competition we face, we believe it is important to make investments in our infrastructure. In addition, a key objective of our capital allocation process is to invest in initiatives designed to drive revenue and Adjusted EBITDA expansion. Approximately 61% of our total capital expenditures since 2017 focused on infrastructure improvements intended to grow these measures. We continue to invest capital to, among other things, increase fiber density and coverage, expand our footprint, increase plant and data capacity, enhance network reliability and improve the customer experience. We have rolled out multi-Gigabit download data service to over 40% of our markets and currently offer Gigabit download data service to all of our passings. We have also deployed DOCSIS 3.1 and begun the deployment of DOCSIS 4.0, which, together with Sparklight TV, further increases our network capacity and enables future growth in our residential data and business data product lines.

Previous wording

We expect to continue to devote financial resources to infrastructure improvements in existing and newly acquired markets as well as to expand high-speed data service in areas adjacent to our existing network. We believe these investments are necessary to continually meet our customers’ needs and remain competitive. The capital enhancements associated with acquisitions include rebuilding low-capacity markets; reclaiming bandwidth from analog video services; implementing 32-channel bonding; deploying DOCSIS 4.0; consolidating back-office functions such as billing, accounting and service provisioning; migrating products to Cable One's platforms; and expanding our high-capacity fiber network.

Current wording

We expect to continue to devote financial resources to infrastructure improvements in existing and newly acquired markets as well as to expand high-speed data service in areas adjacent to our existing network. We believe these investments are necessary to continually meet our customers’ needs and remain competitive. The capital enhancements associated with acquisitions include rebuilding low-capacity markets; reclaiming bandwidth from analog video services; implementing 32-channel bonding; deploying DOCSIS 4.0; consolidating back-office functions such as billing, accounting and service provisioning; migrating products to Cable One platforms; and expanding our high-capacity fiber network.

Previous wording

Our primary goals are to continue growing residential data and business services revenues, to increase profit margins and to deliver strong Adjusted EBITDA and Adjusted EBITDA less capital expenditures over the long-term. To achieve these goals, we intend to continue our disciplined cost management approach, remain focused on customers with expected higher relative value, supplement our growth by targeting a broader scope of incremental customers, including those who are more value-conscious, combat competitive threats in our markets through more targeted pricing and product offerings and follow through with further planned investments in broadband plant upgrades, including the deployment of DOCSIS 4.0 capabilities and new data service offerings for residential and business customers. We also plan to seek broadband-related acquisition and strategic investment opportunities in rural markets in addition to the pursuit of organic growth through market expansion projects. Given our strategic focus on our higher margin residential data and business services product lines, we assess our level of capital expenditures relative to Adjusted EBITDA, unlike others in our industry who may compare their capital expenditures to revenues due to their much larger residential video customer bases.

Current wording

Our primary financial goals are to continue growing residential data and business data revenues, to increase profit margins and to deliver strong Adjusted EBITDA and Adjusted EBITDA less capital expenditures over the long-term. To achieve these goals, we intend to continue our disciplined cost management approach, remain focused on customers with expected higher relative value, supplement our growth by targeting a broader scope of incremental customers, including those who are more value-conscious, combat competitive threats in our markets through more targeted pricing and product offerings and follow through with further planned investments in broadband plant upgrades, including the continued deployment of DOCSIS 4.0 capabilities and new data service offerings for residential and business customers. We also plan to seek broadband-related acquisition and strategic investment opportunities in rural markets in addition to the pursuit of organic growth through market expansion projects. Given our strategic focus on our higher margin residential data and business data product lines, we assess our level of capital expenditures relative to Adjusted EBITDA, unlike others in our industry who may compare their capital expenditures to revenues due to their much larger residential video customer bases.

Previous wording

During the fourth quarter of 2023, we increased our efforts to supplement the growth of our residential data customer base by targeting a broader scope of incremental customers, including those who are more value-conscious, through more targeted pricing and product offerings. These efforts contributed to the growth in our residential data PSUs during the fourth quarter of 2023, as compared to the third quarter of 2023, while also contributing to the reduction in residential data services ARPU for the quarter.

Current wording

Beginning in the fourth quarter of 2023, we increased our efforts to supplement the growth of our residential data customer base by targeting a broader scope of incremental customers, including those who are more value-conscious, through more targeted pricing and product offerings. These efforts contributed to a reduction in residential data services ARPU during 2024.

Previous wording

Our business is subject to extensive governmental regulation, which substantially impacts our operational and administrative expenses. Thus, we could be significantly impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative or judicial rulings. The FCC currently is considering several initiatives, including proposed rules regarding net neutrality that could lead to increased regulation of our data and video services. Numerous states, including Arizona, Minnesota and Missouri (where we have subscribers), also have proposed administrative actions and/or legislation in the past or currently are considering such actions, which could lead to increased regulation of our provision of data services. Several states, including Oregon and Washington (where we also have subscribers), have adopted legislation that requires entities providing broadband internet access service in the state to comply with net neutrality requirements or that prohibits state and local government agencies from contracting with internet service providers that engage in certain network management activities based on paid prioritization, content blocking or other discrimination. We cannot predict whether or when any future changes to the regulatory framework will occur at the federal or state level or whether or to what extent those changes may affect our operations or impose additional costs on our business.

Current wording

Our business is subject to extensive governmental regulation, which substantially impacts our operational and administrative expenses. Thus, we could be significantly impacted by changes to the existing regulatory framework, whether triggered by legislative, administrative or judicial rulings. The FCC currently is considering several initiatives that could lead to increased regulation of our data, voice and video services. Some states, including Arizona and Missouri (where we have subscribers), have proposed administrative actions and/or legislation in the past, which if adopted could lead to increased regulation of our provision of data services. Several states, including Minnesota, Oregon and Washington (where we also have subscribers), have adopted legislation that requires entities providing broadband internet access service in the state to comply with net neutrality requirements or that prohibits state and local government agencies from contracting with internet service providers that engage in certain network management activities based on paid prioritization, content blocking or other discrimination. We cannot predict whether or when any future changes to the regulatory framework will occur at the federal or state level or whether or to what extent those changes may affect our operations or impose additional costs on our business.

Previous wording

We serve our customers through a plant and network with capacity generally measuring 750 megahertz or higher and have DOCSIS 3.1 capabilities throughout our systems. Our technologically advanced fiber-based infrastructure provides for delivery of a full suite of data, video and voice products. Our broadband plant generally consists of a fiber-to-the-premises or HFC network with ample unused capacity, and nearly all of our homes passed have access to Gigabit download speeds, including certain markets that have access to multi-Gigabit download speeds, which we believe meaningfully distinguishes our offerings from certain competitors in our markets. As a result of multi-year investments in our plant and network, we increased broadband capacity and reliability, which has enabled and will continue to enable us to offer even higher download speeds to our customers. In addition, we began the deployment of symmetrical Gigabit speeds over our data network in select markets during 2023 and plan to begin deploying DOCSIS 4.0 by the end of 2024. These upgrades will allow us to further increase plant capacity in support of ongoing increases in consumer demand. We believe these investments will reinforce our competitive strength in this area.

Current wording

We serve our customers through a plant and network with capacity generally measuring 750 megahertz or higher and have DOCSIS 3.1 capabilities throughout our systems. Our technologically advanced fiber-based infrastructure provides for delivery of a full suite of data, video and voice products. Our broadband plant generally consists of a fiber or HFC network with ample unused capacity, and all of our passings have access to Gigabit download speeds, including over 40% of our markets that have access to multi-Gigabit download speeds, which we believe meaningfully distinguishes our offerings from certain competitors in our markets. As a result of multi-year investments in our plant and network, we increased broadband capacity and reliability, which has enabled and will continue to enable us to offer even higher download speeds to our customers. In addition to the deployment of symmetrical Gigabit speeds over our data network in select markets beginning in 2023, we also began deploying DOCSIS 4.0 in the fourth quarter of 2024. These upgrades will allow us to further increase plant capacity in support of continually increasing data usage by consumers. We believe these investments will reinforce our competitive strength in this area.

Previous wording

In addition to our organic growth, we have also completed a number of acquisitions in recent years. In 2017, we acquired NewWave for $740.2 million. In 2019, we acquired Clearwave for $358.8 million and Fidelity for $531.4 million. In 2020, we acquired Valu-Net for $38.9 million. In 2020, we contributed the assets of our Anniston System to Hargray in exchange for an approximately 15% equity interest in Hargray and subsequently acquired the remaining approximately 85% equity interest in 2021 for approximately $2.0 billion. We also acquired certain assets and assumed certain liabilities from CableAmerica for $113.1 million in late 2021.

Current wording

In addition to our organic growth, we have also completed a number of acquisitions in recent years. In 2017, we acquired NewWave for $740.2 million. In 2019, we acquired Clearwave for $358.8 million and Fidelity for $531.4 million. In 2020, we acquired Valu-Net for $38.9 million and contributed the assets of our Anniston System to Hargray in exchange for an approximately 15% equity interest in Hargray. We subsequently acquired the remaining approximately 85% equity interest in Hargray in 2021 for approximately $2.0 billion. We also acquired certain assets and assumed certain liabilities from CableAmerica for $113.1 million in late 2021 and completed a small acquisition for $4.3 million in the third quarter of 2024.

Previous wording

In recent years, we have made investments in several broadband-centric providers serving non-urban markets that follow various strategies similar to our own. Such strategic investments capitalize on opportunities that may not have existed under a full ownership model, allow us to participate more aggressively in the fiber expansion business and may potentially provide future acquisition or investment opportunities, while allowing our management team to focus on our core business and without burdening our cash flow. In 2020, we invested a combined $634.9 million in CTI, Nextlink, Wisper and MBI and contributed the assets of the Anniston System to Hargray in exchange for an approximately 15% equity interest. In 2021, we invested a combined $95.8 million in Point Broadband, Tristar and Nextlink. In 2022, we contributed certain fiber operations to Clearwave Fiber in exchange for an approximately 58% equity interest in Clearwave Fiber valued at $440.0 million as of the closing date, divested our Tallahassee, Florida system and certain other non-core assets and invested a combined $41.8 million (including the $7.0 million fair value of our Tallahassee, Florida system) in Point Broadband, MetroNet, Visionary and Ziply. In 2023, our strategic investment and divestiture activities consisted of the following:

Current wording

In recent years, we have made investments in several broadband-centric providers serving non-urban markets that follow various strategies similar to our own. Such strategic investments capitalize on opportunities that may not have existed under a full ownership model, allow us to participate more aggressively in the fiber expansion business and may potentially provide future acquisition or investment opportunities, while allowing our management team to focus on our core business and without burdening our cash flow. In 2020, we invested a combined $634.9 million in CTI, Nextlink, Wisper and MBI and contributed the assets of the Anniston System to Hargray in exchange for an approximately 15% equity interest. In 2021, we invested a combined $95.8 million in Point, Tristar and Nextlink. In 2022, we contributed certain fiber operations to Clearwave Fiber in exchange for an approximately 58% equity interest in Clearwave Fiber valued at $440.0 million as of the closing date, divested our Tallahassee, Florida system and certain other non-core assets and invested a combined $41.8 million (including the $7.0 million fair value of our divested Tallahassee, Florida system) in Point, MetroNet, Visionary and Ziply. In 2023, we invested an additional $1.6 million in Visionary and an additional $27.8 million in Ziply. In addition, we redeemed our equity investment in Wisper for total cash proceeds of $35.9 million and divested our equity investment in Tristar for total cash proceeds of $20.9 million in 2023. In 2024, we invested an additional $20.0 million in Nextlink, increasing our equity interest to approximately 22% (see note 6 of the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details).

Previous wording

Refer to our Annual Report on Form 10-K for the year ended December 31, 2022 for discussion and analysis of our financial condition and results of operations for 2022 compared to 2021 contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Current wording

Refer to our amended Annual Report on Form 10-K/A for the year ended December 31, 2023 for discussion and analysis of our financial condition and results of operations for 2023 compared to 2022 contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Previous wording

In recent years, our customer mix has shifted away from double- and triple-play packages combining data, video and/or voice services, which is in line with our strategy of focusing on our higher margin residential data and business services product lines. This is largely because some residential video customers have switched to OTT offerings and households continue to discontinue residential voice services. In addition, we have focused on selling data-only packages to new customers rather than cross-selling video to these customers.

Current wording

In recent years, our customer mix has shifted away from double- and triple-play packages combining data, video and/or voice services, which is in line with our strategy of focusing on our higher margin residential data and business data product lines. This is largely because some residential video customers have switched to OTT offerings and households continue to discontinue residential voice services. In addition, we have focused on selling data-only packages to new customers rather than cross-selling video to these customers.

Previous wording

We use various nonfinancial metrics to measure, manage and monitor our operating performance on an ongoing basis. Such metrics include homes passed, PSUs and customer relationships. Homes passed represents the number of serviceable and marketable homes and businesses passed by our active plant. A PSU represents a single subscription to a particular service offering. Residential bulk multi-dwelling PSUs are generally classified as residential and are counted at the individual unit level. Business voice customers who have multiple voice lines are counted as a single PSU. A customer relationship represents a single customer who subscribes to one or more PSUs.

Current wording

We use various nonfinancial metrics to measure, manage and monitor our operating performance on an ongoing basis. Such metrics include passings (which we previously referred to as homes passed), PSUs and customer relationships. Passings represent the number of serviceable and marketable homes and businesses passed by our active plant. A PSU represents a single subscription to a particular service offering. Residential bulk multi-dwelling PSUs are generally classified as residential and are counted at the individual unit level. Business voice customers who have multiple voice lines are counted as a single PSU. A customer relationship represents a single customer who subscribes to one or more PSUs.

Previous wording

We believe homes passed, PSU and customer relationship counts are useful to investors in evaluating our operating performance. Similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in our industry, although our measures of homes passed, PSUs and customer relationships may not be directly comparable to similarly titled measures reported by other companies.

Current wording

We believe passings, PSU and customer relationship counts are useful to investors in evaluating our operating performance. Similar measures with similar titles are common measures used by investors, analysts and peers to compare performance in our industry, although our measures of passings, PSUs and customer relationships may not be directly comparable to similarly titled measures reported by other companies.

Previous wording

Revenues decreased $28.0 million, or 1.6%, due primarily to decreases in residential video and residential voice revenues, partially offset by an increase in residential data revenues.

Current wording

Revenues decreased $98.5 million, or 5.9%, due primarily to decreases in residential data, residential video, business other and residential voice revenues, partially offset by an increase in business data revenues.

Previous wording

Residential video service revenues decreased$67.2 million, or 20.7%, due primarily to a decrease in residential video subscribers.

Current wording

Residential video revenues decreased $35.9 million, or 13.9%, due primarily to a decrease in residential video subscribers, partially offset by a rate adjustment enacted in early 2024.

Previous wording

Residential voice service revenues decreased$6.0 million, or 13.9%, due primarily to a decrease in residential voice subscribers.

Current wording

Residential voice revenues decreased $5.1 million, or 13.8%, due primarily to a decrease in residential voice subscribers.

Previous wording

Other revenues increased$1.3 million, or 1.3%, due primarily to an increase in regulatory revenues.

Current wording

Business data revenues increased $5.8 million, or 2.6%, due primarily to an increase in business data subscribers.

Previous wording

Operating expenses (excluding depreciation and amortization) were$440.9 million for 2023 and decreased$30.0 million, or 6.4%, compared to 2022. The decrease in operating expenses was primarily attribut able to $49.9 million of lower programming and franchise fees as a result of video customer losses, partially offset by increases of $10.9 million in property taxes, $2.9 million in rent expense, $2.5 million in health insurance costs and $2.0 million in maintenance costs. Operating expenses as a percentage of revenues were 26.3% and 27.6% for 2023 and 2022, respectively.

Current wording

Operating expenses (excluding depreciation and amortization) were $416.8 million for 2024 and decreased $24.1 million, or 5.5%, compared to 2023. The decrease in operating expenses was primarily attributable to $32.8 million of lower programming and franchise fees as a result of video customer losses and a $2.9 million reduction in labor and other compensation-related costs, partially offset by increases of $3.2 million in software costs, $2.1 million in network backbone costs and $2.0 million in rent expense. Operating expenses as a percentage of revenues were 26.4% and 26.3% for 2024 and 2023, respectively.

Previous wording

Selling, general and administrative expenses were$354.7 million for 2023 and increased$4.4 million, or 1.2%, compared to 2022. Theincrease in selling, general and administrative expenses was primarily attributable to increases of $9.3 million in marketing costs, $5.4 million in labor and other compensation-related costs and $4.2 million in software expense, partially offset by decreases of $9.4 million in property taxes, $4.3 million in health insurance costs and $3.2 million in professional services fees. Selling, general and administrative expenses as a percentage of revenues were 21.1% and 20.5% for 2023 and 2022, respectively.

Current wording

Selling, general and administrative expenses were $366.0 million for 2024 and increased $11.3 million, or 3.2%, compared to 2023. The increase in selling, general and administrative expenses was primarily attributable to increases of $6.8 million in rebranding costs, $6.2 million in system conversion costs and $2.4 million in software costs, partially offset by a $2.4 million decrease in labor and other compensation-related costs. Selling, general and administrative expenses as a percentage of revenues were 23.2% and 21.1% for 2024 and 2023, respectively.

Previous wording

Depreciation and amortization expense was $342.9 million for 2023 and decreased $7.6 million, or 2.2%, compared to 2022. The decrease in depreciation and amortization expense was primarily due to lower intangible asset amortization expense of $10.4 million driven by the use of accelerated amortization methods for certain customer relationship intangible assets. Depreciation and amortization expense as a percentage of revenues was 20.4% and 20.5% for 2023 and 2022, respectively.

Current wording

Depreciation and amortization expense was $341.8 million for 2024 and decreased $1.1 million, or 0.3%, compared to 2023. Depreciation and amortization expense as a percentage of revenues was 21.6% and 20.4% for 2024 and 2023, respectively.

Previous wording

Interest expense was $170.1 million for 2023 and increased $32.4 million, or 23.6%, compared to 2022, driven primarily by higher interest rates.

Current wording

Interest expense, net, was $138.0 million for 2024 and decreased $13.6 million, or 9.0%, compared to 2023, driven primarily by lower average debt balances.

Previous wording

Other income, net, was $54.6 million for 2023 and consisted primarily of a $28.0 million non-cash gain on fair value adjustment associated with the MBI Net Option, $18.6 million of interest and investment income, a $12.3 million non-cash mark-to-market gain on the investment in Point Broadband and a $1.8 million gain on the redemption of the Wisper equity investment, partially offset by a $3.4 million loss on the sale of the Tristar equity investment and $3.3 million of debt issuance costs written off in connection with the entry into the New Credit Agreement. Other expense, net, was $25.9 million for 2022 and consisted primarily of a $40.7 million non-cash loss on fair value adjustment associated with the MBI Net Option, partially offset by $13.7 million of interest and investment income.

Current wording

Other expense, net, was $59.7 million for 2024 and consisted primarily of a $71.5 million gain related to the MBI Amendment (as defined and described in the following section entitled"Financial Condition: Liquidity and Capital Resources - Liquidity"), a $7.7 million gain related to the C-band spectrum relocation funding received from the federal government and a $6.9 million non-cash gain associated with our Nextlink equity investment, partially offset by a $146.2 million non-cash loss on fair value adjustment associated with the Old MBI Net Option (as defined and described in the section entitled"Financial Condition: Liquidity and Capital Resources - Liquidity"). Other income, net, was $36.1 million for 2023 and consisted primarily of a $28.0 million non-cash gain on fair value adjustment associated with the Old MBI Net Option, a $12.3 million non-cash mark-to-market gain on the investment in Point and a $1.8 million gain on the redemption of the Wisper equity investment, partially offset by a $3.4 million loss on the sale of the Tristar equity investment and $3.3 million of debt issuance costs written off in connection with the entry into the New Credit Agreement (as defined and described in the following section entitled"Financial Condition: Liquidity and Capital Resources - Financing Activity").

Previous wording

Income tax provision was$89.7 million for 2023 and decreased$36.6 million, or 29.0%, compared to 2022. Our effective tax rate was 21.8% and 33.7% for 2023 and 2022, respectively. The decrease in the effective tax rate was due primarily to decreases of $16.5 million in income tax expense related to a change in the valuation allowance associated with the MBI Net Option (as defined and described in note 6 to the consolidated financial statements) and $16.1 million in deferred income tax expense related to state blended rate changes.

Current wording

Income tax provision was$25.2 million for 2024 and decreased$47.6 million, or 65.4%, compared to 2023. Our effective tax rate was 10.3% and 17.7% for 2024 and 2023, respectively. The decrease in the effective tax rate was due primarily to a decrease of $19.0 million in deferred income tax expense related to state blended rate changes, partially offset by an increase of $30.6 million in income tax expense related to a change in the valuation allowance associated with the Old MBI Net Option.

Previous wording

Unrealized loss on cash flow hedges and other, net of tax was $13.3 million for 2023 compared to an unrealized gain on cash flow hedges and other, net of tax of $132.8 million for 2022. The $146.1 million year-over-year change was due to smaller increases in forward interest rates during 2023 compared to the prior year.

Current wording

Unrealized gain on cash flow hedges and other, net of tax was $11.4 million for 2024 compared to an unrealized loss on cash flow hedges and other, net of tax of $13.3 million for 2023. The $24.6 million change was due to a year-over-year increase in forward interest rates.

Previous wording

Adjusted EBITDA is defined as net income plus interest expense, income tax provision, depreciation and amortization, equity-based compensation, severance and contract termination costs, (gain) loss on deferred compensation, acquisition-related costs, (gain) loss on asset sales and disposals, system conversion costs, (gain) loss on sales of businesses, equity method investment (income) loss, other (income) expense and other unusual items, as provided in the following table. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business as well as other non-cash or special items and is unaffected by our capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of debt financing. These costs are evaluated through other financial measures.

Current wording

Adjusted EBITDA is defined as net income plus net interest expense, income tax provision, depreciation and amortization, equity-based compensation, severance and contract termination costs, acquisition-related costs, net (gain) loss on asset sales and disposals, system conversion costs, rebranding costs, government program exit costs, net equity method investment (income) loss, net other (income) expense and other special items, as applicable, as provided in the following table. As such, it eliminates the significant non-cash depreciation and amortization expense that results from the capital-intensive nature of our business as well as other non-cash or special items and is unaffected by our capital structure or investment activities. This measure is limited in that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and our cash cost of debt financing. These costs are evaluated through other financial measures.

Previous wording

We use Adjusted EBITDA to assess our performance. In addition, Adjusted EBITDA generally correlates to the measure used in the leverage ratio calculations under the New Credit Agreement and the Senior Notes Indenture (as defined elsewhere in this Annual Report on Form 10-K) to determine compliance with the covenants contained in the New Credit Agreement and the ability to take certain actions under the Senior Notes Indenture. Adjusted EBITDA is also a significant performance measure that we have used in our incentive compensation programs. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses.

Current wording

We use Adjusted EBITDA to assess our performance. In addition, Adjusted EBITDA generally correlates to the measure used in the leverage ratio calculations under the New Credit Agreement and the Senior Notes Indenture (as defined and described in the following section entitled"Financial Condition: Liquidity and Capital Resources - Financing Activity") to determine compliance with the covenants contained in the New Credit Agreement and the ability to take certain actions under the Senior Notes Indenture. Adjusted EBITDA is also a significant performance measure that we have used in our incentive compensation programs. Adjusted EBITDA does not take into account cash used for mandatory debt service requirements or other non-discretionary expenditures, and thus does not represent residual funds available for discretionary uses.

Previous wording

Our primary funding requirements are for our ongoing operations, capital expenditures, potential acquisitions and strategic investments, payments of quarterly dividends and share repurchases. We believe that existing cash balances, our Senior Credit Facilities and operating cash flows will provide adequate support for these funding requirements over the next 12 months. However, our ability to fund operations, make capital expenditures, make future acquisitions and strategic investments, pay quarterly dividends and make share repurchases depends on future operating performance and cash flows, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

Current wording

Our primary funding requirements are for our ongoing operations, capital expenditures, potential acquisitions and strategic investments, payments of quarterly dividends and share repurchases. We believe that existing cash balances, our Senior Credit Facilities (as defined below) and operating cash flows will provide adequate support for these funding requirements over the next 12 months. However, our ability to utilize those funding sources to fund ongoing operations, make capital expenditures, make future acquisitions and strategic investments, pay quarterly dividends and make share repurchases depends on future operating performance and cash flows, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control.

Previous wording

As part of our 45% minority equity interest in MBI, we acquired the right, but not the obligation, to purchase all but not less than all of the remaining equity interests in MBI that we do not already own between January 1, 2023 and June 30, 2024 (the "Call Option"). Investors affiliated with GTCR LLC, a private equity firm based in Chicago, have the right, but not the obligation, to sell (and to cause all members of MBI other than us to sell) to us and, in such case, we are obligated to purchase all but not less than all of the direct and indirect equity interests in MBI that we do not already own between July 1, 2025 through September 30, 2025 (the "Put Option"). The purchase price payable upon the exercise of the Call Option or the Put Option, as applicable, will be calculated under a formula based on a multiple of MBI’s adjusted EBITDA as specified in the documentation governing our investment in MBI in 2020. We have not yet obtained the capital that we believe will be necessary to pay the purchase price if either the Call Option or the Put Option are exercised. At this time, we do not expect to exercise the Call Option.

Current wording

As of December 31, 2023, we held a call option to purchase all but not less than all of the remaining equity interests in MBI that we do not already own between January 1, 2023 and June 30, 2024. The call option expired unexercised on June 30, 2024. Certain investors in MBI held a put option to sell (and to cause all members of MBI other than us to sell) to us all but not less than all of the remaining equity interests in MBI that we do not already own between July 1, 2025 and September 30, 2025 (these call and put options are collectively referred to as the "Old MBI Net Option").

Previous wording

The $74.9 million year-over-year decrease in net cash provided by operating activities was primarily attributable to increases in cash paid for income taxes and interest along with unfavorable changes in the timing of working capital balances compared to the prior year, partially offset by a $5.1 million increase in Adjusted EBITDA

Current wording

The $1.0 million year-over-year increase in net cash provided by operating activities was primarily attributable to favorable changes in working capital, largely offset by a decrease in Adjusted EBITDA.

Previous wording

The $106.4 million year-over-year decrease in net cash used in investing activities was due primarily to $56.7 million of proceeds received from sales of equity investments in 2023, a $43.1 million decrease in cash paid for capital expenditures and a $21.0 million decrease in new debt and equity investments, partially offset by $9.2 million of proceeds received from the dispositions of our Tallahassee, Florida system and certain other non-core assets in the prior year.

Current wording

The $222.5 million year-over-year increase in net cash used in investing activities was due primarily to $250.0 million of net cash paid in December 2024 for the Upfront Payment in connection with the MBI Amendment and $56.7 million of aggregate proceeds from the sale of equity investments during the prior year that did not recur, partially offset by a $72.7 million decrease in cash paid for capital expenditures and a $9.4 million decrease in cash paid for equity investments.

Previous wording

On July 1, 2015, the Board authorized up to $250.0 million of share repurchases (subject to a total cap of 600,000 shares of our common stock). On May 20, 2022, the Board authorized up to $450.0 million of additional share repurchases (with no cap as to the number of shares of common stock). We exhausted the share repurchase authorization under the 2015 authorization during the second quarter of 2022 and had $143.1 million of remaining share repurchase authorization under the Share Repurchase Program as of December 31, 2023. Additional purchases under the Share Repurchase Program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions. Since we first became publicly traded in 2015 through the end of 2023, we have repurchased 646,244 shares of our common stock at an aggregate cost of $556.9 million, including 141,551 shares purchased at an aggregate cost of $99.6 million during 2023 under our share repurchase programs. We may, from time to time, continue to opportunistically repurchase shares depending on the trading price of our common stock, market conditions and other factors.

Current wording

On May 20, 2022, the Board authorized up to $450.0 million of additional share repurchases (with no cap as to the number of shares of common stock). We had $143.1 million of remaining share repurchase authorization under the Share Repurchase Program as of December 31, 2024. Additional purchases under the Share Repurchase Program may be made from time to time on the open market and in privately negotiated transactions. The size and timing of these purchases are based on a number of factors, including share price and business and market conditions. Since we first became publicly traded in 2015 through the end of 2024, we have repurchased 646,244 shares of our common stock at an aggregate cost of $556.9 million. We may, from time to time, continue to opportunistically repurchase shares depending on the trading price of our common stock, market conditions and other factors. We did not repurchase any shares under the Share Repurchase Program during the twelve months ended December 31, 2024.

Previous wording

We currently expect to continue to pay comparable quarterly cash dividends on shares of our common stock, subject to approval of the Board. During the fourth quarter of 2023, the Board approved a quarterly dividend of $2.95 per share of common stock, which was paid on December 15, 2023, bringing total dividends distributed during 2023 to $66.3 million. On February 6, 2024, the Board approved a quarterly dividend of $2.95 per share of common stock to be paid on March 8, 2024 to holders of record as of February 20, 2024.

Current wording

We currently expect to continue to pay comparable quarterly cash dividends on shares of our common stock, subject to approval of the Board. During the fourth quarter of 2024, the Board approved a quarterly dividend of $2.95 per share of common stock, which was paid on December 20, 2024, resulting in total dividends distributed during 2024 of $67.9 million. On February 4, 2025, the Board approved a quarterly dividend of $2.95 per share of common stock to be paid on March 7, 2025 to holders of record as of February 18, 2025.

Previous wording

On February 22, 2023, we entered into the fourth amended and restated credit agreement with our lenders to amend and restate the Credit Agreement (as amended and restated, the "New Credit Agreement") to, among other things, (i) increase the aggregate principal amount of commitments under the Revolving Credit Facility by $500.0 million to $1.0 billion; (ii) extend the scheduled maturity of the Revolving Credit Facility from October 2025 to February 2028; (iii) upsize the Term Loan B-3 by$150.0 million to $757.0 million(the "TLB-3 Upsize"); (iv) extend the scheduled maturities of the Term Loan B-2 and the Term Loan B-3 from October 2027 to October 2029 (subject to adjustment as described in the notes to the table below summarizing our outstanding term loans as of December 31, 2023); (v) increase the fixed spreads on the Term Loan B-2 and the Term Loan B-3 from 2.00% to 2.25%; and (vi) transition the benchmark interest rate for the Revolving Credit Facility, the Term Loan B-2 and the Term Loan B-3 from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") plus a 10 basis point credit spread adjustment. Except as described above, the New Credit Agreement did not make any material changes to the principal terms of the Term Loan B-2, the Term Loan B-3, the Term Loan B-4 or the Revolving Credit Facility. Upon the effectiveness of the New Credit Agreement, we drew $488.0 million under the Revolving Credit Facility and, together with the net proceeds from the TLB-3 Upsize, repaid all $638.3 million aggregate principal amount of our then outstanding Term Loan A-2. In July 2023, we transitioned the benchmark interest rate for the Term Loan B-4 from LIBOR to SOFR plus a credit spread adjustment that ranges from approximately 11.4 basis points to 42.8 basis points based on the interest period elected.

Current wording

On February 22, 2023, we entered into the fourth amended and restated credit agreement with our lenders to amend and restate the Credit Agreement (as amended and restated, the "New Credit Agreement") to, among other things, (i) increase the aggregate principal amount of commitments under the Revolving Credit Facility by $500.0 million to $1.0 billion; (ii) extend the scheduled maturity of the Revolving Credit Facility from October 2025 to February 2028; (iii) upsize the outstanding principal amount under the Term Loan B-3 by $150.0 million to $757.0 million (the "TLB-3 Upsize"); (iv) extend the scheduled maturities of the Term Loan B-2 and the Term Loan B-3 from October 2027 to October 2029 (subject to adjustment as described in the notes to the table below summarizing our outstanding term loans as of December 31, 2024); (v) increase the fixed spreads on the Term Loan B-2 and the Term Loan B-3 from 2.00% to 2.25%; and (vi) transition the benchmark interest rate for the Revolving Credit Facility, the Term Loan B-2 and the Term Loan B-3 from the London Interbank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") plus a 10 basis point credit spread adjustment. Except as described above, the New Credit Agreement did not make any material changes to the principal terms of the Term Loan B-2, the Term Loan B-3, the Term Loan B-4 or the Revolving Credit Facility. Upon the effectiveness of the New Credit Agreement, we drew $488.0 million under the Revolving Credit Facility and, together with the net proceeds from the TLB-3 Upsize, repaid all $638.3 million aggregate principal amount of our then outstanding Term Loan A-2. In July 2023, we transitioned the benchmark interest rate for the Term Loan B-4 from LIBOR to SOFR plus a credit spread adjustment that ranges from approximately 11.4 basis points to 42.8 basis points based on the interest period elected.