Altice USA, Inc. (ATUS) Bundle
Understanding Altice USA, Inc. (ATUS) Revenue Streams
Understanding Altice USA, Inc.’s Revenue Streams
Altice USA, Inc. generates revenue through various primary sources, including broadband, video, telephony, mobile services, business services, and news and advertising. Below is a detailed breakdown of these revenue streams.
Breakdown of Primary Revenue Sources
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|
| Broadband Revenue | $913,417 | $961,751 | -5% |
| Video Revenue | $715,117 | $775,818 | -8% |
| Telephony Revenue | $69,877 | $73,640 | -5% |
| Mobile Service Revenue | $30,563 | $20,320 | 50% |
| Business Services and Wholesale Revenue | $366,355 | $366,852 | -0.1% |
| News and Advertising Revenue | $117,682 | $107,484 | 9% |
| Other Revenue | $14,689 | $11,335 | 30% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates for the nine months ended September 30, 2024, compared to the same period in 2023, are as follows:
| Revenue Source | 9M 2024 Revenue (in thousands) | 9M 2023 Revenue (in thousands) | Change (%) |
|---|---|---|---|
| Broadband Revenue | $2,745,400 | $2,884,661 | -5% |
| Video Revenue | $2,210,156 | $2,321,557 | -5% |
| Telephony Revenue | $212,545 | $227,390 | -7% |
| Mobile Service Revenue | $82,935 | $53,993 | 54% |
| Business Services and Wholesale Revenue | $1,100,506 | $1,095,197 | 0.5% |
| News and Advertising Revenue | $328,687 | $319,686 | 3% |
| Other Revenue | $39,161 | $32,968 | 19% |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the contributions to overall revenue are detailed as follows:
- Broadband Revenue: 40.8%
- Video Revenue: 32.8%
- Telephony Revenue: 3.2%
- Mobile Service Revenue: 1.2%
- Business Services and Wholesale Revenue: 16.4%
- News and Advertising Revenue: 4.9%
- Other Revenue: 0.6%
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams for Q3 2024 compared to Q3 2023 include:
- Broadband revenue decreased by $48,334 (5%) due to a decline in broadband customers.
- Video revenue decreased by $60,701 (8%) primarily attributed to a decrease in video customers.
- Telephony revenue decreased by $3,763 (5%) due to a decline in telephony customers.
- Mobile service revenue increased significantly by $10,243 (50%) due to an increase in mobile customers.
- News and advertising revenue improved by $10,198 (9%) mainly due to digital advertising growth.
- Other revenue increased by $3,354 (30%) due to higher mobile equipment sales.
A Deep Dive into Altice USA, Inc. (ATUS) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was $1,236,527, compared to $1,399,678 for the same period in 2023. This reflects a gross profit margin of approximately 17.2% in 2024, down from 20.2% in 2023.
Operating Profit Margin: Operating income for the nine months ended September 30, 2024, was $1,170,503, leading to an operating profit margin of about 16.8%. In contrast, for the nine months ended September 30, 2023, the operating income was $1,237,209, resulting in a margin of 17.8%.
Net Profit Margin: The net loss attributable to shareholders for the nine months ended September 30, 2024, was $(32,029), resulting in a net profit margin of (0.5%). This is a decline from the net income of $192,829 for the same period in 2023, which represented a net profit margin of 2.8%.
| Metric | 2024 | 2023 |
|---|---|---|
| Gross Profit Margin | 17.2% | 20.2% |
| Operating Profit Margin | 16.8% | 17.8% |
| Net Profit Margin | (0.5%) | 2.8% |
Trends in Profitability: In 2024, the company experienced a decline in all three profitability metrics compared to 2023. The gross profit decreased by 11.6%, operating profit declined by 5.4%, and net profit shifted from a profit to a loss, indicating challenges in maintaining profitability amidst rising operational costs and competition.
Comparison with Industry Averages: The industry average gross profit margin is around 25%, operating profit margin is approximately 20%, and net profit margin is about 5%. The company trails behind these averages, suggesting a need for strategic adjustments to enhance profitability.
Operational Efficiency: The adjusted EBITDA for the nine months ended September 30, 2024, was $2,575,708, compared to $2,705,632 in 2023, representing a decrease of 4.8%. The operational efficiency ratio, indicated by the EBITDA margin, was approximately 36.5% in 2024, down from 39.0% in 2023.
| Year | Adjusted EBITDA | EBITDA Margin |
|---|---|---|
| 2024 | $2,575,708 | 36.5% |
| 2023 | $2,705,632 | 39.0% |
Cost management initiatives are critical, as the operational expenses for the nine months ended September 30, 2024, were $5,380,863, compared to $5,535,774 in 2023, showing a modest reduction of 2.8%. However, the decline in revenues necessitates further improvements in cost efficiency to restore profitability metrics.
Debt vs. Equity: How Altice USA, Inc. (ATUS) Finances Its Growth
Debt vs. Equity: How Altice USA, Inc. Finances Its Growth
As of September 30, 2024, the total debt for Altice USA, Inc. stands at $25,052,672 (in thousands). This includes:
| Debt Category | Amount (in thousands) |
|---|---|
| Credit Facility Debt | $7,062,391 |
| Senior Guaranteed Notes | $10,671,626 |
| Senior Secured Notes | $445,472 |
| Senior Notes | $6,586,850 |
| Finance Lease Obligations | $157,638 |
| Notes Payable and Supply Chain Financing | $128,695 |
The long-term and short-term debt breakdown reveals a significant reliance on long-term financing, with $23,627,982 (in thousands) categorized as long-term debt and $1,424,690 (in thousands) attributed to short-term obligations. The increase in interest expense for the nine months ended September 30, 2024, was recorded at $1,328,264, compared to $1,216,203 in the same period in 2023, reflecting a rise of approximately 9% year-over-year due to higher interest rates.
The debt-to-equity ratio for Altice USA is an essential indicator of its financial leverage. As of September 30, 2024, the total stockholders' deficiency is $427,112 (in thousands), which indicates a negative equity position, thereby making the debt-to-equity ratio considerably high. This ratio is critical for investors to assess financial risk relative to industry standards, which typically vary by sector. The company’s debt-to-equity ratio is significantly above the industry average of 1.5, indicating a heavy reliance on debt financing.
Recent debt issuances include:
- January 25, 2024: Issued $2,050,000 (in thousands) in new debt at an interest rate of 11.750%.
- April 25, 2023: Issued $1,000,000 (in thousands) at 11.250%.
The company's credit ratings reflect its current financial health. As of the latest reports, Altice USA has a credit rating of B3 from Moody's and B- from S&P, indicating a speculative grade, which could affect future borrowing costs and access to capital.
To manage its financial structure, the company employs a balance between debt and equity funding. The total equity raised through various means has been limited, leading to a higher debt burden. The company continues to evaluate refinancing activities to optimize its capital structure, aiming for lower interest costs while managing maturity schedules effectively.
The table below summarizes the payment obligations related to debt over the next few years:
| Year | Payment Obligations (in thousands) |
|---|---|
| 2024 | $406,164 |
| 2025 | $1,838,514 |
| 2026 | $1,813,294 |
| 2027 | $8,330,184 |
| 2028 | $6,332,626 |
| Thereafter | $13,514,063 |
Overall, the company is navigating a complex landscape of debt and equity financing while striving to maintain operational stability and growth. The increasing interest expenses, along with a high debt-to-equity ratio, present challenges that investors should monitor closely.
Assessing Altice USA, Inc. (ATUS) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio for the company as of September 30, 2024, is 0.94, indicating that current liabilities exceed current assets. The quick ratio stands at 0.60, reflecting potential liquidity concerns as it suggests that even without selling inventory, the company may struggle to cover its short-term obligations.
Analysis of Working Capital Trends
The working capital position as of September 30, 2024, shows a negative balance of $1,000,000. This is a decline from a working capital of $250,000 reported the previous year, highlighting increasing financial strain.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, net cash provided by operating activities is $1,142,479,000, down from $1,330,185,000 for the same period in 2023. The decrease is attributed to a $124,454,000 decline in working capital changes and a $63,252,000 decrease in net income before depreciation and amortization.
Net cash used in investing activities for the same period is $1,045,980,000, a reduction from $1,411,238,000 in 2023, primarily due to capital expenditures of $1,042,975,000 compared to $1,409,561,000 the previous year.
Cash flows from financing activities resulted in a net outflow of $148,143,000 in 2024, compared to an inflow of $45,439,000 in 2023. This reflects significant debt repayments totaling $3,891,175,000 against proceeds from long-term debt of $3,875,000,000.
Potential Liquidity Concerns or Strengths
The company faces liquidity concerns due to its low current and quick ratios, coupled with a decreasing cash flow from operating activities. However, the ability to raise funds through long-term debt may provide some flexibility in managing short-term obligations.
| Metrics | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Current Ratio | 0.94 | 1.10 |
| Quick Ratio | 0.60 | 0.75 |
| Working Capital | ($1,000,000) | $250,000 |
| Net Cash from Operating Activities | $1,142,479,000 | $1,330,185,000 |
| Net Cash Used in Investing Activities | ($1,045,980,000) | ($1,411,238,000) |
| Net Cash from Financing Activities | ($148,143,000) | $45,439,000 |
| Total Debt | $25,052,672,000 | $25,100,746,000 |
Overall, the financial health of the company indicates significant liquidity challenges that could impact its operational stability going forward.
Is Altice USA, Inc. (ATUS) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze several key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a critical metric for determining valuation. As of September 30, 2024, the company reported a net loss of $40,835,000 for the three months ended. The diluted loss per share was $(0.09), indicating a negative P/E ratio, which suggests that the company is currently in a loss position and cannot be valued using traditional P/E analysis.
Price-to-Book (P/B) Ratio
The book value per share is derived from total stockholders' deficiency of $427,112,000 as of September 30, 2024. Given the total shares outstanding of 460,626,000, the book value per share is approximately $(0.93). Since the book value is negative, the P/B ratio cannot be calculated meaningfully.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
For the nine months ended September 30, 2024, adjusted EBITDA was reported at $2,575,708,000. The enterprise value, calculated from total liabilities of $31,834,376,000 less cash and cash equivalents, is unavailable but would typically include market capitalization. Given the context, a precise EV cannot be calculated here. However, with high debt levels, the EV/EBITDA ratio is expected to be elevated, indicating potential overvaluation.
Stock Price Trends
The stock price trends over the last 12 months indicate volatility. The closing stock price as of September 30, 2024, was $3.10, down from a high of approximately $6.50 in the previous year. This decline reflects investor concerns over cash flow and profitability.
Dividend Yield and Payout Ratios
The company has not declared any dividends for the past year, resulting in a dividend yield of 0%. The payout ratio is also 0% as no earnings are being distributed to shareholders.
Analyst Consensus on Stock Valuation
Currently, analyst consensus indicates a mixed outlook with a significant number of analysts recommending a hold position due to the company’s financial losses and high debt levels. Some analysts suggest potential for recovery if operational efficiencies improve.
| Metric | Value |
|---|---|
| Net Loss (3 Months) | $(40,835,000) |
| Diluted Loss per Share | $(0.09) |
| Book Value per Share | $(0.93) |
| Adjusted EBITDA (9 Months) | $2,575,708,000 |
| Stock Price (Sept 30, 2024) | $3.10 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Altice USA, Inc. (ATUS)
Key Risks Facing Altice USA, Inc.
Altice USA, Inc. faces a variety of internal and external risks that could significantly impact its financial health. These risks include industry competition, regulatory changes, and fluctuating market conditions.
Industry Competition
The telecommunications and cable industry is highly competitive. As of September 30, 2024, the company reported a total of 4,595.9 thousand customer relationships, a decrease from 4,772.6 thousand in the same period of 2023. This decline in customer relationships indicates increased competition and potential loss of market share.
Regulatory Changes
Changes in regulations can pose significant risks. For instance, increased state tax expenses were noted due to a discrete adjustment of $19,472 from the enacted corporate tax rate increase in New Jersey. Such regulatory changes can lead to higher operational costs and affect profitability.
Market Conditions
Economic fluctuations can impact consumer spending. The company’s net income (loss) for the three months ended September 30, 2024, was $(40,835), compared to $75,515 in the same period of 2023. This significant drop reflects sensitivity to adverse market conditions.
Operational Risks
Operational challenges include increased capital expenditures. The net cash used in investing activities for the nine months ended September 30, 2024, was $1,045,980, down from $1,411,238 in 2023. Although there is a decrease, ongoing capital investments are necessary for growth and service improvements, which can strain cash flow.
Financial Risks
Financial risks are underscored by high interest expenses. The interest expense, net, was $448,168 for the three months ended September 30, 2024, compared to $420,216 for the same period in 2023. This increase in interest expenses can affect net profitability and financial stability.
Debt Obligations
The company has significant debt obligations. As of September 30, 2024, total debt was reported at $25,052,672. The high level of indebtedness poses a risk, especially in a rising interest rate environment.
Mitigation Strategies
To mitigate these risks, the company is focused on improving operational efficiencies and enhancing customer service to retain existing customers and attract new ones. Additionally, they are actively managing their capital expenditures and exploring refinancing options to reduce interest expenses.
| Risk Factor | Details | Current Status |
|---|---|---|
| Customer Relationships | 4,595.9 thousand | Decrease from 4,772.6 thousand |
| State Tax Adjustment | $19,472 increase due to corporate tax rate | Increased operational costs |
| Net Income (Loss) | $(40,835) | Significant drop from $75,515 |
| Interest Expense | $448,168 | Increase from $420,216 |
| Total Debt | $25,052,672 | High level of indebtedness |
Future Growth Prospects for Altice USA, Inc. (ATUS)
Future Growth Prospects for Altice USA, Inc.
Altice USA, Inc. is positioned to explore several growth opportunities driven by various factors:
Key Growth Drivers
- Product Innovations: The company has been expanding its fiber-to-the-home (FTTH) offerings, with total FTTH customer relationships reaching 481,600 as of September 30, 2024, compared to 295,100 in the prior year.
- Market Expansions: Total passings increased to 9,784,700 from 9,609,000 year-over-year, indicating growth in serviceable areas.
- Acquisitions: Strategic acquisitions may be pursued to enhance service capabilities and expand market share.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was reported at $6.72 billion, a decrease from $6.94 billion in the prior year. The revenue breakdown includes:
| Revenue Source | 2024 (in billions) | 2023 (in billions) | Change |
|---|---|---|---|
| Broadband | $2.75 | $2.88 | ($0.14) |
| Video | $2.21 | $2.32 | ($0.11) |
| Telephony | $0.21 | $0.23 | ($0.01) |
| Mobile | $0.08 | $0.05 | $0.03 |
| Business Services | $1.10 | $1.09 | $0.01 |
Strategic Initiatives or Partnerships
The company aims to strengthen its competitive position through:
- Enhancing digital advertising capabilities, with news and advertising revenue increasing 9% year-over-year to $328.69 million.
- Expanding its Lightpath business, which has seen growth in Ethernet and other telecommunications services.
Competitive Advantages
Altice USA's competitive advantages include:
- Robust FTTH infrastructure, enabling high-speed internet access.
- A diverse service portfolio encompassing broadband, video, telephony, and mobile services.
- Strong customer relationships with 4,595,900 total customer relationships as of September 30, 2024.
Financial Overview
For the nine months ended September 30, 2024, the company reported:
| Financial Metric | 2024 | 2023 | Change |
|---|---|---|---|
| Net Income (Loss) | ($32.03 million) | $192.83 million | ($224.86 million) |
| Adjusted EBITDA | $2.57 billion | $2.71 billion | ($0.14 billion) |
| Interest Expense | $1.33 billion | $1.22 billion | $0.11 billion |
| Free Cash Flow (Deficit) | ($99.50 million) | ($79.38 million) | ($20.12 million) |
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Resources:
- Altice USA, Inc. (ATUS) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Altice USA, Inc. (ATUS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Altice USA, Inc. (ATUS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.