WideOpenWest, Inc. 8-K Analysis & Summary – 3/14/2025

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WideOpenWest, Inc.

8-K

Earnings Release (Preliminary), Guidance Update

Filing date:

03/14/2025

TLDR:

WideOpenWest, Inc. (WOW!) announced its fourth quarter and full year 2024 results, reporting a decrease in total revenue but an increase in adjusted EBITDA, and provided first quarter 2025 guidance.

ELI5:

WOW, a broadband company, made less money overall but managed costs better. They’re losing customers, and someone wants to buy them, making the future unclear.

Accession #:

0001558370-25-002955

Published on

March 16, 2025

Analyst Summary

Total revenue decreased by 9.6% in Q4 2024 and 8.1% for the full year, primarily due to declines in Video and HSD RGUs.
Adjusted EBITDA increased by 3.5% in Q4 and 4.7% for the full year, indicating improved cost management and operational efficiency.
Net loss was $10.6 million for Q4 2024 and $58.8 million for the full year, an improvement from the previous year.
Total subscribers decreased by 25,400, and HSD RGUs decreased by 19,700, highlighting challenges in subscriber retention and acquisition.
The company refinanced its debt with a new Priority Credit Agreement, including $200 million in new borrowings, resulting in a total net leverage of 3.5x on an LTM Adjusted EBITDA basis.
Management emphasizes progress in Greenfield markets and the success of their simplified pricing strategy, while acknowledging continued challenges in subscriber growth in Q1 2025 guidance.
Operating Profit Margin increased from -45.9% to 1.0%.
Net Profit Margin increased from -41.9% to -9.3%.
Return on Assets (ROA) increased from -19.0% to -3.9%.
Return on Equity (ROE) increased from -111.4% to -28.2%.

Opportunities and Risks

Opportunity: Greenfield market expansion shows promise with increased penetration rates.
Risk: Continued decline in subscribers, especially in core services like HSD and Video, is a significant concern.
Risk: High debt levels increase financial risk and limit flexibility.
Risk: The unsolicited acquisition proposal introduces uncertainty and could distract management.

Potential Implications

Company Performance

Continued subscriber losses could negatively impact long-term revenue growth and profitability.
Successful integration and performance of Greenfield markets are crucial for future growth.
Effective debt management is essential to maintain financial stability and flexibility.
The outcome of the acquisition proposal could significantly alter the company’s strategic direction and operations.

Stock Price

Uncertainty surrounding the acquisition proposal could lead to stock price volatility.
Positive developments in subscriber acquisition and Greenfield market performance could boost investor confidence.
Concerns about high debt levels and declining revenue could negatively impact stock valuation.

WOW! (WideOpenWest, Inc.) 8-K Filing Report – March 14, 2025

Executive Summary

This report analyzes WideOpenWest, Inc.’s (WOW!) 8-K filing released on March 14, 2025, pertaining to their Q4 and full-year 2024 financial results. The company reported a decrease in total revenue but an increase in Adjusted EBITDA and penetration rates in Greenfield markets. While cost management appears strong, subscriber losses, particularly in HSD and Video, remain a concern. The company is navigating a challenging environment with declining legacy services and ongoing investments in Greenfield markets. The unsolicited acquisition proposal adds another layer of uncertainty. Overall, a Hold rating is suggested, pending further evidence of sustainable subscriber growth and clarity on the acquisition front.

Company Overview

WideOpenWest, Inc. (WOW!) is a broadband provider operating primarily in the Midwest and Southeast United States. They offer high-speed internet, cable TV, phone, and business services. The industry is highly competitive, facing pressure from larger players and the shift towards streaming services. Recent developments include Greenfield market expansion, a new Priority Credit Agreement, and an unsolicited acquisition proposal.

Detailed Analysis

Financial Statement Analysis

Revenue

Total revenue decreased by 9.6% in Q4 2024 and 8.1% for the full year compared to 2023. This decline is primarily attributed to a reduction in Video and HSD RGUs. HSD revenue also saw a decrease, although less pronounced.

Metric	Q4 2024	Q4 2023	Change	FY 2024	FY 2023	Change
Total Revenue (Millions)	$152.6	$168.8	-9.6%	$630.9	$686.7	-8.1%
HSD Revenue (Millions)	$104.9	$108.7	-3.5%	$423.6	$430.4	-1.6%

Profitability

Net loss was $10.6 million for Q4 2024 and $58.8 million for the full year. However, Adjusted EBITDA increased by 3.5% in Q4 and 4.7% for the full year, indicating improved cost management. The Adjusted EBITDA margin also improved significantly.

Metric	Q4 2024	Q4 2023	Change	FY 2024	FY 2023	Change
Net Loss (Millions)	$(10.6)	$(43.5)		$(58.8)	$(287.7)
Adjusted EBITDA (Millions)	$73.7	$71.2	3.5%	$288.4	$275.4	4.7%
Adjusted EBITDA Margin	48.3%	42.2%		45.7%	40.1%

Subscribers

WOW! reported a decrease in total subscribers and HSD RGUs. This is a key area of concern, as subscriber growth is crucial for long-term sustainability. The company attributes some of the losses to hurricane impact.

Metric	Dec 31, 2024	Dec 31, 2023	Change
Total Subscribers	478,700	504,100	-25,400
HSD RGUs	470,400	490,100	-19,700

Liquidity and Leverage

The company refinanced its debt with a new Priority Credit Agreement, including $200 million in new borrowings. Total net leverage is 3.5x on an LTM Adjusted EBITDA basis. While the refinancing provides flexibility, the high leverage remains a risk.

Management’s Narrative (MD&A) Insights

Management highlights the progress in Greenfield markets and the success of their simplified pricing strategy. They emphasize strong cost management and re-accelerated investments in new markets. However, the narrative downplays the significant subscriber losses and the overall revenue decline. The forward-looking statements regarding Q1 2025 guidance suggest continued challenges in subscriber growth.

Red Flags and Uncommon Metrics

Subscriber Losses: The continued decline in subscribers, especially in core services like HSD and Video, is a significant red flag.
High Leverage: The company’s high debt levels increase financial risk and limit flexibility.
Acquisition Proposal: The unsolicited acquisition proposal introduces uncertainty and could distract management.
Hurricane Impact: While the impact of hurricanes is acknowledged, it’s important to assess the long-term effects on subscriber churn and infrastructure costs.

Conclusion and Actionable Insights

WOW! is facing a challenging transition as it navigates declining legacy services and invests in new growth areas. While cost management is commendable, the subscriber losses and high leverage remain significant concerns. The unsolicited acquisition proposal adds another layer of uncertainty. The Q1 2025 guidance suggests continued headwinds.

Recommendations:

Monitor Subscriber Trends: Closely track subscriber acquisition and churn rates to assess the effectiveness of growth initiatives.
Assess Acquisition Impact: Evaluate the potential impact of the acquisition proposal on the company’s strategy and operations.
Analyze Greenfield Performance: Monitor the penetration rates and profitability of Greenfield markets to determine their long-term value.
Evaluate Debt Management: Assess the company’s ability to manage its debt burden and generate sufficient cash flow to meet its obligations.

Financial Analysis of WideOpenWest, Inc. (WOW)

1. Commentary

WideOpenWest (WOW) experienced a challenging year, as reflected in the decrease in total revenue and a net loss for both the quarter and the full year 2024. The decline in revenue was primarily driven by decreases in video and telephony services, partially offset by growth in HSD revenue. Despite the revenue decline, the company managed to increase its Adjusted EBITDA and Adjusted EBITDA margin, indicating improved operational efficiency and cost management. The company is focused on expanding its Greenfield markets, with approximately 31,500 new homes passed and increased penetration rates.

2. Financial Ratio and Metric Analysis

Profitability

Ratio/Metric	2024	2023	Trend	Industry Comparison
Gross Profit Margin	N/A (Insufficient Data)	N/A (Insufficient Data)	N/A	Varies widely by specific services offered.
Operating Profit Margin	1.0%	-45.9%	Increased from -45.9% to 1.0%	The industry average is around 10-15%. WOW is below average.
Net Profit Margin	-9.3%	-41.9%	Increased from -41.9% to -9.3%	The industry average is around 5-10%. WOW is below average.
Return on Assets (ROA)	-3.9%	-19.0%	Increased from -19.0% to -3.9%	The industry average is around 3-5%. WOW is below average.
Return on Equity (ROE)	-28.2%	-111.4%	Increased from -111.4% to -28.2%	The industry average is around 10-15%. WOW is below average.
EPS (Basic)	-0.72	-3.53	Increased from -3.53 to -0.72	Varies significantly. Need competitor data for comparison.
EPS (Diluted)	-0.72	-3.53	Increased from -3.53 to -0.72	Varies significantly. Need competitor data for comparison.

Liquidity

Ratio/Metric	2024	2023	Trend	Industry Comparison
Current Ratio	0.61	0.65	Decreased from 0.65 to 0.61	The industry average is around 1.0-1.5. WOW is below average.
Quick Ratio	0.44	0.47	Decreased from 0.47 to 0.44	The industry average is around 0.8-1.0. WOW is below average.
Cash Ratio	0.21	0.14	Increased from 0.14 to 0.21	The industry average is around 0.2-0.3. WOW is around average.

Solvency/Leverage

Ratio/Metric	2024	2023	Trend	Industry Comparison
Debt-to-Equity Ratio	4.78	3.55	Increased from 3.55 to 4.78	The industry average is around 1.0-2.0. WOW is above average.
Debt-to-Assets Ratio	0.66	0.61	Increased from 0.61 to 0.66	The industry average is around 0.4-0.6. WOW is above average.
Interest Coverage Ratio	1.0	0.99	Increased from 0.99 to 1.0	The industry average is around 2.0-3.0. WOW is below average.

Activity/Efficiency

Ratio/Metric	2024	2023	Trend	Industry Comparison
Inventory Turnover	N/A	N/A	N/A	N/A
Days Sales Outstanding (DSO)	18.4 days	20.7 days	Decreased from 20.7 days to 18.4 days	The industry average is around 30-45 days. WOW is below average.
Days Payable Outstanding (DPO)	24.1 days	31.7 days	Decreased from 31.7 days to 24.1 days	The industry average is around 30-45 days. WOW is below average.
Asset Turnover	0.42	0.45	Decreased from 0.45 to 0.42	The industry average is around 0.5-0.7. WOW is below average.

Valuation

Ratio/Metric	2024	2023	Trend	Industry Comparison
Price-to-Earnings Ratio (P/E)	-5.74	-1.17	Increased from -1.17 to -5.74	Varies significantly. Need competitor data for comparison.
Price-to-Book Ratio (P/B)	3.33	3.03	Increased from 3.03 to 3.33	The industry average is around 1-3. WOW is above average.
Price-to-Sales Ratio (P/S)	0.13	0.09	Increased from 0.09 to 0.13	The industry average is around 1-2. WOW is below average.
Enterprise Value to EBITDA (EV/EBITDA)	5.1	N/A	N/A	The industry average is around 7-10. WOW is below average.

Growth Rates

Ratio/Metric	2024	2023	Trend	Industry Comparison
Revenue Growth	-8.1%	N/A	N/A	Varies significantly. Need competitor data for comparison.
Net Income Growth	79.5%	N/A	N/A	Varies significantly. Need competitor data for comparison.
EPS Growth	79.6%	N/A	N/A	Varies significantly. Need competitor data for comparison.

Other Relevant Metrics

Adjusted EBITDA: This is a non-GAAP metric that WOW uses to assess its operating performance. It is calculated by adding back depreciation and amortization, impairment losses on intangibles, interest expense, loss on early extinguishment of debt, non-recurring professional fees, M&A integration and restructuring expense, patent litigation settlement, non-cash stock compensation, other income, and income tax benefit to net loss. The company believes this metric provides a more meaningful comparison of its performance across different periods. Adjusted EBITDA increased by 4.7% year-over-year, from $275.4 million in 2023 to $288.4 million in 2024.
Homes Passed: The number of homes the company’s network reaches. This metric is important for assessing the potential for future growth. Homes Passed increased from 1,932,200 to 1,962,100.
Total Subscribers: The total number of customers subscribing to WOW’s services. This metric is a key indicator of the company’s market share and revenue generation. Total Subscribers decreased from 504,100 to 478,700.
HSD RGUs: Represents the number of high-speed data revenue generating units. This is a key driver of revenue for WOW. HSD RGUs decreased from 490,100 to 470,400.