Frontier Communications Parent (FYBR) Q4 2023 earnings summary

Executive summary

• FY23 delivered the first full year of organic Adjusted EBITDA growth in more than a decade; FY24 guidance calls for accelerated mid-single-digit growth.

• Fiber footprint reached 6.5M locations and fiber broadband customers reached 2.007M at year-end; fiber Adjusted EBITDA was $1.3B, over 60% of LTM total Adjusted EBITDA.

• Q4 Adjusted EBITDA grew 4% YoY, the fastest quarter of organic growth since 2016.

Financial highlights

• Q4 revenue was $1.426B, down 0.8% YoY; operating income was $120M and net income was $17M.

• Q4 Adjusted EBITDA was $549M, up 4% YoY; its margin was 38.5%, versus 36.7% in Q4 2022.

• FY23 revenue was $5.751B, net income $29M, and Adjusted EBITDA $2.127B, versus $5.787B, $441M, and $2.080B, respectively, in FY22.

• FY23 net cash from operations was $1.34B; Q4 net cash from operations was $296M.

• Gross annualized cost savings reached $527M, exceeding the $500M target and double the initial plan.

Outlook and guidance

• FY24 guidance: Adjusted EBITDA of $2.20B–$2.25B, 1.3M new fiber passings, and cash capital investment of $3.00B–$3.20B.

• FY24 outlook includes cash taxes of ~$20M, net cash interest payments of ~$750M, pension and OPEB expense of ~$40M net of capitalization, and cash contributions of ~$125M.

• EBITDA growth is expected to reach 5% at the guidance midpoint; fiber build will be optimized.