Cable One, Inc. · NYSE:CABO
Cable One — Wells Fargo Securities Technology, Media & Telecommunications Conference 2015
25 slides from Cable One's conference presentation, Nov 10, 2015
Slide 1: Investor Presentation - Wells Fargo TMT Conference
INVESTOR PRESENTATION CABLEOQ~_wiE’ Wells Fargo Securities Technology, Media & Telecommunications Conference November 11, 2015
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Cable One, Inc. (Cable ONE or the Company). This presentation includes “forward-looking statements” that reflect Cable ONE’s current views and information currently available. This information is, where applicable, based on assumptions and analysis t
Slide 3: Presenters
Presenters Tom Might Kevin Coyle Chairman & CEO CFO CABLEONE'| 3
Slide 4: Cable ONE's operating focus is on long-term free cash flow growth
Cable ONE’s operating focus is on long-term free cash flow growth, not short-term revenue or unit growth. We switched from a video-centric triple-play strategy to a Residential Data and Business Services strategy in 2012. We like the early results and long-term prospects. CABLEONE'| 4
Slide 5: Before we get into the numbers, let us explain where we are coming from
Before we get into the numbers, let us explain where we are coming from Slide from SNL Kagan Cable Investor Conference — November 11, 2013 WALL STREET MYTHS ABOUT MSOs TODAY CABLEONE'| 5
Slide 6: Wall Street Myths About MSOs Today: Contribution vs. Free Cash Flow
WALL STREET MYTHS ABOUT MSOs TODAY Slide from SNL Kagan Cable Investor Conference — November 11, 2013 CONTRIBUTION vs. FREE CASH FLOW WALL STREET MYTH #1 The $40 of Contribution per video sub equals profit , so video sub counts still matter a lot to MSO value. REALITY All MSO Expenses and Capex are
Slide 7: Wall Street Myths About MSOs Today: Video vs. Non-Video Linkage
WALL STREET MYTHS ABOUT MSOs TODAY Slide from SNL Kagan Cable Investor Conference — November 11, 2013 VIDEO vs. NON-VIDEO LINKAGE WALL STREET MYTH #2 Video is a necessary gateway product for MSOs. REALITY 1. Non-video subs (HSD-only) have a 26% CAGR while video subs losses accelerate. 2. Business re
Slide 8: Wall Street Myths About MSOs Today: Scale vs. Focus
WALL STREET MYTHS ABOUT MSOs TODAY Slide from SNL Kagan Cable Investor Conference — November 11, 2013 SCALE vs. FOCUS WALL STREET MYTH #3 Economy-of-scale is the only MSO strategy that works. REALITY There is no relationship between MSO expense per unit and size, because there are plenty of other su
Slide 9: Wall Street Myths About MSOs Today: Content vs. Distribution
WALL STREET MYTHS ABOUT MSOs TODAY Slide from SNL Kagan Cable Investor Conference — November 11, 2013 CONTENT vs. DISTRIBUTION WALL STREET MYTH #4 Bundled content providers have nearly unlimited and unending leverage over distributors. REALITY See MYTH #1. Little MSO video free cash flow means littl
Slide 10: A hypothetical model with a shift from Product A to Product B
A hypothetical model with a shift from Product A to Product B helps demonstrate important points Product A dominates revenues today, but is failing and has modest OCF margins Product B is smaller, but has rapid growth and twice the OCF margin YEAR 0 YEAR 10 propucT | PRODUGT | TOTAL propucr | PRopUG
Slide 11: Has our model lived up to our expectations? YES!
Has our model lived up to our expectations? YES! Slide Derived from Cable ONE Road Show Presentation — June, 2015 4> Video PSUs' Bad debt Opex 2012 - 2014 growth HSDPSUs' Commercial Revenue Adj. PSUs EBITDA? 1 See Adlaes ESTOA cOMBON 2d epoctianon Me ApeND Aces EBTOA a pared Mane 2015 Pak Den ue wb
Slide 12: Has our model lived up to our expectations? YES! (LTM)
Has our model lived up to our expectations? YES! Slide Derived from Cable ONE Road Show Presentation — June, 2015 Updated for LTM 2012 261% 1; T Mrowth “sl 60% r 8% i smd 0% Video PSUs' Bad debt Opex HSDPSUs' Commercial Revenue Adj. ps¥sRevenut EBITDA* gee os (5%) (36%) aw (55%) v » 1 See Adlaes EST
Slide 13: Has our model lived up to our expectations? YES!
Has our model ved up to our expectations? YES! Slide Derived from Cable ONE Road Show Presentation — June, 2015 Revenue ($mm) Adj. EBITDA‘ ($mm) $779 $779.—=—« $805: $826. $815 $809 arn 37.5% 37.6% $300 $305 $304 2010 «201120122013 2014 LTM 2010 © 2011 «201220132014. LT 3/81/16 3/81/16 Capex ($mm) E
Slide 14: Has our model lived up to our expectations? YES! (updated for LTM)
Has our model lived up to our expectations? YES! Slide Derived from Cable ONE Road Show Presentation — June, 2015 Updated for LTM Revenue ($mm) Adj. EBITDA? ($mm) Eee $779 s77g.—S«$805 $826 $815 Seo $05 Margin 37.5% 2t-6% 38.5% $300 $305 -#308$310 2010 2011-2012, 2013-2014. LTM 2010 ©2011 «2012, 201
Slide 15: Residential Data and Business Services start to dominate Adjusted EBITDA
As predicted by our hypothetical model, Residential Data and Business Services start to dominate Adjusted EBITDA Total Revenues are slack while declining products still dominate, but overall margins expand in the Residential Data and Business Services direction Revenues by Product ($mm) Adjusted EBI
Slide 16: A more detailed look at the last quarter versus a year ago
A more detailed look at the last quarter versus a year ago shows we are passing through the inflection point (Unaudited and in '000s) Three Months Ended September 30, 2015 2014 $Change %Change REVENUES Reside ideo $81,209 $87,188 -$5,979 6.9% Residential Data $73,074 $66,296 $6,778 10.2% Residential
Slide 17: Abundant liquidity, low leverage and meaningful free cash flow
Our abundant liquidity, low leverage and meaningful free cash flow has us looking for attractive investment scenarios Maturity stack ($mm) LW Leverage 18x Liquidity(Cash+availableRIC) $345mm Revolving crecitfaclty due 2020 Weightedaverage life 8.6 years = Termloan facility due 2020 Weightedaverageco
Slide 18: Business Services offer high growth, high margins and years of opportunity
Business Services offer high growth, high margins and years of opportunity Monthly Business Services Revenue ($mm) Business Services persistently adds about ‘$7 $1m in annualized revenue per month 56 wihconsistenty high margins $5 34 $3 $82 31 80 Jan-10 Jan-11 Jan-12. Jan-13 Jan-14 Jan-18 LTM Revenu
Slide 19: Heavy investments in the Residential Data business are starting to pay off
Heavy investments in the Residential Data business are starting to pay off Heavy HSD Investments (2013-2016) Significant Customer Benefits * Completing all-digital conversion * Spring 2015 Increased top speed to 100M * Replacing all CMTS * Fall 2015 Increased standard speed to 100M * Increasing chan
Slide 20: Cable ONE's operating focus is on long-term free cash flow growth
Cable ONE’s operating focus is on long-term free cash flow growth, not short-term revenue or unit growth. We switched from a video-centric triple-play strategy to a Residential Data and Business Services strategy in 2012. We like the early results and long-term prospects. SSONE 20
Slide 21: Appendix
Appendix > Use of Non-GAAP Financial Metrics > Reconciliation of Net Income to Adjusted EBITDA > Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow CABLEONE |21
Slide 22: Use of Non-GAAP Financial Metrics
Use of Non-GAAP Financial Metrics ‘The Company uses certain measures that are not defined by Generally Accepted Accounting Principles (GAAP) to evaluate various aspects of its business. Adjusted EBITDA, Adjusted EBITDA Margin (labeled “Margin” in this presentation) and Free Cash Flow are non-GAAP fi
Slide 23: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA REVENUES: NET INCOME Plus: Interest expense, net Provision for income taxes Depreciation and amortization Equity-based compensation expense Cash-based compensation expense (Gain) loss on deferred compensation Other (income) expense, net Other (gain) lo
Slide 24: Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow 3 2015 03 2014 $Change ——% Change Net cash provided by operating activities 7 $38 $40 106% Capital expenditures “31 52 a 40% Billing system implementation costs 1 1 0 14% Interest expense 8 0 8 NM Pre-spin performance-base
Slide 25: CABLEOQ~_wiE’
CABLEOQ~_wiE’
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