Declining trends in June and the unexpected negative impact of some system divestitures forced Mediacom Communications to reduce its year-end revenue and cash flow guidance by one percentage point each, spooking investors who drove down the small market cable operator’s stock in kind.
Mediacom said that it would lower its year end revenue guidance from 8%-to-9% growth to 7%-to-8% and its adjusted operating income before depreciation and amortization (AOIBDA, a measure of cash flow) to 6%-to-7%, versus its previous guidance of 7%-to- 8% growth.
The revision helped drive down Mediacom shares by nearly 12% (94 cents each) in early trading Tuesday to $7.24 per share. The stock began to tick up in subsequent trading, priced at $7.45 each (down 73 cents) at 11: 05 a.m. Tuesday.
On a conference call with analysts, Mediacom chief financial officer Mark Stephan said that the reason for the guidance was two-fold.
Stephan said that about one-half of one point of the reduction was due to subscriber and growth trends in June coming in “lighter than expected.” He added that that acquisition and divestiture activity – Mediacom bought one small system and sold another, resulting in a decline of about 3,300 customers – also contributed about one half of one percentage point to the guidance revision.
For the quarter, Mediacom reported revenue of $324.7 million, up 7.4% and AOIBDA increased 3.8% to $119.3 million.
Mediacom added about 2,000 digital video customers, 13,000 high-speed data customers and 21,000 telephone customers in the period. Basic subscribers declined by 18,000 in the period