In the first quarter of 2026, CEO Jim Holanda's first full quarter, Cable One reported total revenue of $353.0 million, down 7.3% from $380.6 million a year earlier, and adjusted EBITDA of $183.3 million (a 51.9% margin, down from 53.3%), with net residential broadband losses of 12,600 as elevated churn persisted in competitive markets. The company generated approximately $115 million of free cash flow in the quarter and about $500 million over the trailing four quarters, reduced operating and SG&A expenses, and paid down $90.6 million of debt while repaying its $575 million of matured convertible notes via a revolver draw. Management pointed to year-over-year improvement in connects, an MSO-wide mobile launch about two months in, and improving business-services execution under new leadership, while cautioning that operational changes would take time to show up in results. Net leverage edged up to 4.0x and the company completed a $42 million fiber-to-the-tower sale (a $26.6 million gain) as it continued prioritizing debt reduction ahead of the expected Q4 MBI close.
Good afternoon, and welcome to Cable One's first quarter 2026 earnings call. We're glad to have you join us as we review our results.
Before we proceed, I'd like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future revenue, customer growth, connects, churn rates in ARPU, the future competitive structure of our markets, the anticipated benefits of our mobile service offering, new product rollouts, future customer retention trends, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, our plans to expand our multi-gig capabilities in more markets, future cash flow and capital expenditures, potential uses for our cash flow, the upcoming MBI transaction, including the put purchase price, MBI's future debt levels, integration timing, anticipated cost and tax efficiencies, combined leverage ratios and closing date.
The anticipated timing for closing of the merger of Point Broadband with Clearwave Fiber and expected benefits from that transaction, future tax savings and our future financial performance, capital allocation policy, leverage ratios and financing plans. You can find factors that could cause Cable One's actual results to differ materially from the forward-looking statements discussed during today's call in today's earnings release and in our SEC filings, including our 2025 annual report on Form 10-K and our forthcoming first quarter 2026 quarterly report on Form 10-Q. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP.
When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our CEO, Jim Holanda, and CFO, Todd Koetje. With that, I'll turn the call over to Jim.
Thanks, Jordan, and good afternoon, everyone. We really appreciate you joining us today. I've now been in the role for a little over 70 days, which has given me the opportunity to spend meaningful time with our teams, get closer to our markets, and develop a clearer view of where we are performing well and where we need to improve. At a high level, I'd say the work underway across the business is moving in the right direction, but those efforts are not yet showing up consistently in the results. Today, I want to spend my time on three things. What we're seeing in the business, what I've learned since stepping into the role, and our focus and priorities going forward. Starting with the quarter, we're not yet seeing the full benefit of the changes we were making in the business.
Results reflect the broader economic backdrop and continued pressure in our more competitive markets, particularly in customer retention. While we have already begun to make changes in these areas, it remains early, and those efforts are not yet meaningfully reflected in our results. At the same time, first quarter connects improved year-over-year, which we view as an early indication that elements of our strategy are beginning to gain traction. In addition, we are roughly two months into our MSO-wide mobile launch, and while it is too early to draw conclusions around retention or lifetime value, initial customer response has been encouraging. We continue to believe mobile can become an important component of the broader relationship over time.
Even with these challenges, the business is generating substantial free cash flow, reinforcing both the durability of the model and our ability to continue to execute on our debt reduction, strengthen the balance sheet, and create long-term shareholder value. In the first quarter, we generated approximately $115 million of free cash flow and $500 million over the past four quarters, providing meaningful flexibility to allocate capital in a disciplined manner. Turning to residential services, I want to spend a bit more time on what we're seeing in the business. In the first quarter, we reported 12,600 net residential broadband customer losses on a sequential basis. While this reflects continued pressure in certain areas of the business, there are several underlying dynamics that help frame how we are thinking about the trajectory going forward.
Over the course of my career, I've seen firsthand what has and has not worked in operating environments like this, and those lessons are shaping how we are approaching the business today. First, churn was elevated in the quarter but remained primarily concentrated within our more competitive markets, which allow us to concentrate our retention efforts where they can have the greatest impact. At the same time, new connects improved year-over-year, driven in part by value-conscious customer segments. These customers represent an important part of our segmentation strategy and remain focused on adding them in an accretive way. We also saw year-over-year improvement across certain go-to-market channels, including e-commerce and direct sales, reinforcing our focus on meeting customers where they prefer to engage and expanding on our connect opportunities. From a retention standpoint, we are implementing targeted initiatives to better identify and engage at-risk customers.
These include speed upgrades, more gradual stepped promotional roll-offs, AI-driven tools, and a new CRM platform expected to go live later this year. We are also deepening multi-product customer relationships through offerings such as mobile, whole-home Wi-Fi, enhanced online security, and comprehensive technical support for the connected home, all while continuing to invest in the network to further strengthen the consistent, reliable experience our customers expect. While still early, these are the types of operational actions we believe can improve retention trends over time. Looking at ARPU, results in the quarter reflected downward pressure from go-to-market initiatives and targeted retention offers, partially offset by continued sell-in to higher speed tiers and the broader multi-product offerings just mentioned. While we may see some variability from quarter to quarter, we continue to expect ARPU trends to remain broadly stable for the year.
Taken together, while retention remains the primary challenge, we believe the underlying trends in connects and multi-product offerings provide a constructive foundation as we work to improve customer outcomes and drive more consistent performance. Turning to business services, overall performance showed improvements through the back half of the quarter. Under Ed Butler's leadership since early January of this year, the business services organization has moved quickly from assessment into execution. Targeted investments in sales enablement, go-to-market discipline, and a new sales training program showed improved results across our fiber, carrier, and enterprise channels. While still early, these trends are encouraging and reinforce our confidence in the actions underway. Todd will address some discrete items in the quarter in more detail. Clearly, competitive intensity persists. However, we believe our network capacity, reliability, and local operating presence position us well, and we continue to invest for improved performance.
Today, approximately 53% of our markets are multi-gig capable, and we expect to expand that capability to most markets by year-end, reinforcing our ability to meet growing customer demand across the footprint. Against that backdrop, over the past several weeks, it has become clear that our biggest opportunity is improving the consistency of execution across the footprint. Many of the underlying dynamics are consistent with patterns I've seen in prior operating environments. As a leadership team, we've aligned around a focused set of priorities where disciplined execution can drive the most meaningful improvement. These priorities center on strengthening retention and conversion, simplifying our product set, and ensuring greater consistency in how we go to market across the footprint.
We've already begun to take action in each of these areas with the objectives of improving the customer experience, the price-value equation, and therefore the customer trends and the financial performance over time. The work we're doing today will still take some time to show up in our results, and we would not expect it to fully translate into the numbers within a single quarter. Our focus right now is on improving overall execution of the array of operating strategies at our disposal and continuing to strengthen the balance sheet. Stepping back, I remain confident in our long-term opportunity. The durability of our cash flow allows us to continue prioritizing debt reduction while maintaining the flexibility to invest in the business and support long-term shareholder value creation.
That confidence is grounded in the strength and the capacity of our network, as well as the clear opportunity we see to improve execution within our existing footprint. With that, I'll turn it over to Todd, who will provide a recap of our financial performance.
Thanks, Jim. Starting with the top line, total revenues for the first quarter of 2026 were $353 million versus $380.6 million in the first quarter of 2025, with the year-over-year decrease driven primarily by lower residential video and residential data revenues. Residential video accounted for approximately $10 million of the decrease. Residential data revenues decreased $11.6 million or 5.1% year-over-year, due primarily to a 6.1% decline in subscribers. Business data revenues decreased $1 million or 1.8% year-over-year. Operating expenses of $93.9 million for the first quarter of 2026 decreased 6% compared to the first quarter of last year, due primarily to a reduction in programming costs associated with our video business.
OpEx was 26.6% and 26.2% of revenues in Q1 of 2026 and Q1 of 2025, respectively. Selling general and administrative expenses totaled $87.2 million or 24.7% of revenues in the first quarter of 2026. Compared to $95.4 million or 25.1% in the first quarter last year. The decrease in SG&A was driven by lower labor costs and a reduction in billing system conversion costs. Adjusted EBITDA for Q1 of 2026 was $183.3 million or 51.9% of revenues, compared to $202.7 million or 53.3% of revenues in Q1 of 2025. Capital expenditures were $68.4 million in the first quarter, a decrease of 3.8% year-over-year. During the quarter, we invested $5.1 million of CapEx for new market expansion projects. We continue to track towards 2025 levels for full year CapEx.
Adjusted EBITDA less CapEx totaled $114.9 million for Q1 of 2026, compared to $131.6 million in Q1 of last year. In March, our $575 million convertible notes matured and were repaid in full with a $575 million revolver draw. Throughout the quarter, we paid down a total of $90.6 million of debt, of which $86.1 million was voluntary. We opportunistically paid down our senior notes by $33.7 million and term loans by $27.4 million at very attractive discounts, along with a $25 million repayment under our revolver at quarter end. Such payments demonstrate our continued commitment to debt reduction.
As of March 31st, we had $165.6 million of cash and equivalents on hand. Our total debt balance was approximately $3.1 billion, consisting of approximately $1.7 billion of term loans, $550 million of revolver draws, $548 million of unsecured notes, $345 million of convertible notes, and $3 million of finance lease liabilities. We also had $700 million of undrawn capacity under our $1.25 billion revolving credit facility at quarter end, providing us additional committed capital. Our net leverage ratio on a last quarter annualized basis was four times. As Jim mentioned, we are focused on strengthening our balance sheet.
While we have the committed capital in place and sufficient excess operating liquidity to affect the MBI acquisition at closing in Q4 2026, as we have stated before, we will remain proactive in our balance sheet management initiatives and continue to evaluate the markets with a focus on optimizing our longer-term capital solutions. Turning to our investment partnerships, we posted updated information about our unconsolidated investments on our investor relations website. For the fourth quarter of 2025, these businesses generated approximately $542 million of LQA revenue and $262 million of LQA adjusted EBITDA, representing year-over-year growth of roughly 17% and 36% respectively. These businesses also grew broadband customers by approximately 22,900 or 7.9% and added over 80,000 new fiber passings during the year. This summary excludes the financial results of MBI as we provide additional detail within our quarterly filings.
Additionally, CTI Towers, Ziply, and MetroNet are no longer reflected in this table following the monetization of those investments, each of which generated attractive returns. We believe these outcomes, including both the operating performance of these businesses and the monetization of certain investments, reflect the strength of these assets and the value created over time. Finally, I'll touch on a couple of items related to a recent transaction, along with an update on a pending one. In mid-March, we completed the sale of certain fiber-to-the-tower contract rights for $42 million in cash. We recognized a $26.6 million gain on the sale. Such contracts generated $9 million of business data revenues in 2025 and $2.1 million in Q1. The sale reduced first quarter business data revenue by approximately $300,000.
Results were also modestly impacted by lower revenue from EchoStar as they continue to decommission portions of their 5G network build-out, representing approximately $50,000 in the quarter and roughly $200,000 on an annualized basis, which we believe represents substantially all of our remaining exposure to this activity. Meanwhile, the merger of our Point Broadband and Clearwave Fiber strategic investments remains on track to close during Q2, subject to customary closing conditions. We continue to work proactively on our pending acquisition of MBI. The Cable One and MBI teams are preparing for an efficient integration of MBI's operations when the transaction closes, which is expected at the beginning of Q4. Before we open it up for questions, I'd reiterate that while the current environment remains competitive, the business continues to generate strong cash flow, and we remain focused on disciplined execution and capital allocation.
We are continuing to prioritize debt repayment while investing thoughtfully in the business. We believe the changes underway position us to deliver improved performance over time. With that, we are ready to take your questions.