NORWALK, Conn.–(BUSINESS WIRE)–Frontier Communications Parent, Inc. (NASDAQ: FYBR) reported first-quarter 2023 results today.
“We delivered another strong quarter and reached a critical milestone in our transformation. Thanks to our team’s consistent operational performance, we achieved EBITDA growth for the first time in five years,” said Nick Jeffery, President and Chief Executive Officer of Frontier.
“We are creating an internet company that people love. Over the last two years, we have rallied around our purpose of Building Gigabit America, invested in fiber, enhanced our product, put the customer at the center of everything we do and made it easier to do business with us. We are quickly becoming an agile, digital infrastructure company, and I’m confident we will return to growth this year.”
First-Quarter 2023 Highlights1
- Built fiber to 339,000 locations
- Added a record 87,000 fiber broadband customers, resulting in fiber broadband customer growth of 19% from the first quarter of 2022
- Revenue of $1.44 billion, net income of $3 million and Adjusted EBITDA of $519 million
- Capital expenditures of $1.15 billion, including $523 million of non-subsidy-related build capital expenditures and $37 million of subsidy-related build capital expenditures
- Net cash from operations of $389 million driven by strong operating performance and increased focus on working capital management
- Achieved annualized run-rate cost savings of $398 million and raised cost savings target to $500 million by the end of 2023
- Ranked No. 1 for the fastest internet upload speeds in the U.S. according to Ookla Speedtest results from the first quarter of 2023
First-Quarter 2023 Consolidated Financial Results
- Revenue of $1.44 billion decreased 0.5% from the first quarter of 2022 as growth in consumer, business and wholesale fiber was more than offset by declines in legacy copper
- Operating income was $143 million and net income was $3 million
- Adjusted EBITDA of $519 million increased 2.0% over the first quarter of 2022 as revenue declines were more than offset by lower content, selling, general and administrative expenses, and cost-saving initiatives
- Adjusted EBITDA margin of 36.0% increased from 35.2% in the first quarter of 2022
- Capital expenditures of $1.15 billion increased from $0.45 billion in the first quarter of 2022 as fiber expansion initiatives accelerated
First-Quarter 2023 Consumer Results
- Consumer revenue of $761 million decreased 1.9% from the first quarter of 2022 as strong growth in fiber broadband was more than offset by declines in legacy copper broadband and voice
- Consumer fiber revenue of $448 million increased 10.1% over the first quarter of 2022 as growth in consumer broadband, voice, and other more than offset declines in video
- Consumer fiber broadband revenue of $298 million increased 17.3% over the first quarter of 2022 driven by growth in fiber broadband customers
- Consumer fiber broadband customer net additions of 84,000 resulted in consumer fiber broadband customer growth of 19.5% from the first quarter of 2022
- Consumer fiber broadband customer churn of 1.20% was roughly flat with churn of 1.19% in the first quarter of 2022
- Consumer fiber broadband ARPU of $61.44 decreased 1.1% from the first quarter of 2022 driven primarily by the autopay and gift-card incentives introduced in the third quarter of 2021
First-Quarter 2023 Business and Wholesale Results
- Business and wholesale revenue of $657 million decreased 1.4% from the first quarter of 2022 as growth in fiber was more than offset by declines in copper
- Business and wholesale fiber revenue of $281 million increased 6.0% over the first quarter of 2022 as growth in business was partly offset by modest declines in wholesale
- Business fiber broadband customer churn of 1.45% increased from 1.24% in the first quarter of 2022
- Business fiber broadband ARPU of $104.38 decreased 1.2% from the first quarter of 2022
Capital Structure2
At March 31, 2023, Frontier had total liquidity of $2.7 billion, including a cash and short-term investments balance of approximately $2.0 billion and $0.7 billion of available borrowing capacity on its revolving credit facility. Frontier’s net leverage ratio on March 31, 2023 was approximately 3.7x. Frontier has no long-term debt maturities prior to 2027.
2023 Outlook3
Frontier today updated guidance for capital expenditures and interest expense, while reaffirming all other operational and financial expectations for 2023.
Frontier’s guidance for the full year 2023 is:
- Adjusted EBITDA of $2.11 – $2.16 billion, unchanged from prior guidance
- Fiber build of 1.3 million new locations, unchanged from prior guidance
- Cash capital expenditures of $3.00 – $3.20 billion, an increase from prior guidance of $2.80 billion, reflecting higher inventory levels and fiber build costs
- Cash taxes of approximately $20 million, unchanged from prior guidance
- Net cash interest payments of approximately $655 million, an increase from prior guidance of $630 million, reflecting the $750 million of debt raised in March 2023
- Pension and OPEB expense of approximately $50 million (net of capitalization), unchanged from prior guidance
- Cash pension and OPEB contributions of approximately $125 million, unchanged from prior guidance
About Frontier
Frontier is leading the “un-cable” revolution. Driven by our purpose, Building Gigabit America, we are relentless in our pursuit of always delivering a better customer experience. Providing digital infrastructure that empowers people to create the future, we’re connecting millions of consumers and businesses in 25 states with reliable fiber internet and multi-gigabit speeds. For more information, visit www.frontier.com.
