CABO Cable One

Julia Laulis President and Chief Executive Officer
Steven Cochran Senior Vice President and Chief Financial Officer
Zack Silver B. Riley FBR
Stephan Bisson Wolfe Research
Maddie Schrage KeyBanc Capital Markets
Sebastiano Petti JPMorgan
Call transcript
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Good day and welcome to the Cable ONE, CABO, Earnings Report Q3 2018. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Steven Cochran, CFO. ahead. go Please

Steven Cochran

Good quarter Shawn. you welcome Cable to us Thank earnings afternoon call. third results. our XXXX we have We're ONE's as you, review and excited with to

statements remind proceed, we today's contain events I'd expectations. to relating Before you future to like discussion that may and forward-looking

obligation You is recent listed whether in actual press in its and to can release could under SEC materially any differ and update events, of ONE's factors otherwise. Cable that our or filings. as new today's ONE Cable from no find in disclaims to expressly cause results these result fact future a projections information, obligation statements forward-looking

discussion measures directly comparable Additionally call site accounting generally in at measures certain most accepted financial not discussed to release Reconciliations the can with Web measures today's our include on that non-GAAP of on earnings U.S. remarks or principles. a this financial of found be presented will GAAP are in conformity our

Joining let me is me that, call to over Laulis. the our CEO, Julie. Julie on President turn With and today's call

Julia Laulis

afternoon. before Steven. back Steven will recent Thank financial our go for and full some for few for our joining Good call third call. quarter over you, Thank accomplishments a recap of review I handing us the XXXX highlights earnings you a to performance.

to the residential numerical and for For Number well recognized XX Internet the of customer service. demonstrated I'm the and amaze focus associates second on strive this their we have so achieved overall our Award me that internet our products based customer them that and am associates. ongoing thanking highest say to and survey. and study now fully the opportunity communication companies the to ONE's congratulating the I to provide current J.D. as quarters in can as billing, continues the continues Northeast lead fortunate customers experiences. as both we of receiving score quarter service proud strong of discuss I performance. the excited am After the ONE growth also Cablefax awards as our by X by and by operational row as were West three translate the to in prior our factors; Among I we in MSO region in great Year provider satisfaction a studied, past financial Cable as to begin inclusion score Cable and reflect Power team to these total into Division. five highest the on the our XXXX ranked This want the with recently summer, XXXX customers year

adjusted growth include associated impact and Some cost an quarter, total year-over-year the customer increase including in to of seasons. greater with accomplish X.X%. able despite increases highlights were revenues SG&A costs We this of peak EBITDA our in acquisition EBITDA during activity one higher of customer X.X% of the marketing in

of growth basis both realizing segments. the on for This a XX.X%, respectively, accomplish higher-margin customer again, increased Once services HSD sequential is and than as now or over total nearly more PSUs X% HSD and of a strategy, X,XXX XXXX. successful QX and grew both compared continued services ARPUs more customers and business while HSD-led year-over-year quarter business ONE and serves quarter execution residential our revenues. results for and increase net growth HSD The we our successful which have our transition our and of believe an We residential at to XX% this and We to the well. long-term nearly were to this Cable still X.X% sequential inclusive basis. on a in increased I demonstrate shareholders mentioned, activity, company contribute than resulted business products of X,XXX our additions X,XXX XX% the able

As it rental tiers, HSD HSD rate ARPU this year-over-year. was year, increased adjustment ARPU usage-based to Division. by earlier contributions to growth further Residential modem than has subscriptions of XX% more up a billing ARPU, the residential premium from and Northeast alignment mix our and marketing relates of been fueled

As call, I excited mentioned last and new pricing been on results. and our testing option about we've are market-based packaging the

greater are that changes control. improve of higher We and our to will customers implementing now continue process connects drive in even we think choice give the ARPU and

of we to business us patterns have the our Northeast Division intelligence behavior in help The of as impacts our as migrated and order monitor understand continues consumption and to needed course our to changing HSD customers continue consumer pricing. to integration transformation Cable XX% of group ONE as the will utilize around We maximize we adjust opportunity backbone. and our

billing today. to allows a us conversion all recently Our was experience. system actually provide as consistent completed, of this of And customer-centric more

the also operational needed efficiencies in Division. all-digital the conversion planning will and to additional for execution continue We begin our while we Northeast realize

to As to backbone, increase Cable performance. add peering the it relates capacity, improved we and ONE continue

capacity is customers manage utilization, the year, XXX% only rapidly using are we to operating at increased in costs while of XX% that are increasing we but growth well positioned holding not by usage. which Over only available that flat. customer peak our last have the means our we nearly add capacity, The result

hosted the offering the technology. of in PBX we the third cloud-based latest service voice the business and entire customers completed front, business of flexibility deployment services virtual our the across freedom On footprint, quarter,

focus and of the sell services product are Our business on new set. our rates. have an take our sales seeing we is excited and is increase in enhancing team product to developing continued to This reflective

trunks cost-effective our launch modern scalability, enables have SIP is and customers our benefit more SIP TDM-based who than recent entire trunking flexibility throughout with of Business service PBXs a example traditional Another service. area. solution

we and their what world. stand HSD connectivity and strategy exploring company the we for, a that transition who business, that a we business to also communities enriches of services Given our to have new been centric reflects with nature committed our a residential are brand better providing

additions We From I'm standpoint, opportunities the and presents Recent about very what evaluating of Northeast top we to pleased expect a a including Division this that share growth. VP hire Human team valuable Sales, and on us just we and Commercial the sampling more a Vice this to President a promote are next is continue Director talent. new new to drive additions a we are Resources, of continue of that to optimistic allow quarter.

ONE process that over call with this year so the our now time details in matching now Harvey, like associates I recovering to that Hurricane recently from financial the recent donations associates at the desire to need. operators provide are hurricanes. some those by just our turning the Before we will who we very those were experienced to thoughts made proud position. loss last say was And who've Steven I Steven, that more the with empathize It those was third and of with to greatest would results. during of quarter Cable help on impacted support our the of our in is expressed

Steven Cochran

Julie. Thanks,

results combined results ONE Julie that getting is as our for Before quarterly Cable legacy reflect our into time both and the details NewWave and legacy quarter 'XX. first 'XX third the fully and mentioned,

third 'XX the results. quarter into getting Now

income year compared million enacted of of XXXX. $XX.X million at of the reform legislation the XXXX income in of achieved increase our Operating quarter revenues third on in quarter the prior the net to performance a to robust of as XX.X% The $XX.X our in financial $XXX.X were year-over-year. rose XX% XX.X%. insurance or from quarter. revenues quarter, third XX%. lower third were to year respectively. expenses data along end in was half revenues or rate XXXX $XX.X Revenue $XX.X million of the basis with and an SG&A federal of quarter an from XXXX Residential were of Selling, from services compensation million with performance prior third result and XX.X% $X.XX, to of XXXX million million of general quarter per conversion The of first share and to marketing continuation a higher for Net of in XXXX in and taxes a XX.X% increases million the XX.X% demonstrated $XXX.X was increase during of compared or third quarter. our by or the in quarter fully income million business $X.XX primarily increased was attributed year with expenses. diluted year. $XX administrative for quarter tax expenses increase increase Net $XX.X and third third costs income revenues the a XX.X% compared The decreasing net the revenues strong revenues effective XX.X% and financial system prior in increased tax driven quarter the XX.X% in combined the

million the will increased Adjusted expenses normal was fourth the EBITDA XXXX, quarter third marketing and quarter. of that million $XXX.X expect We to year from the prior in in for levels $XXX.X quarter. return X.X%

Our $XXX.X margin of million the points or of XX.X%. for and XXXX, XXXX increased year totaled going $XX.X XX from XX.X% Year-to-date, third million $XX.X respectively. have basis quarter and the prior revenue. quarter expenditures Capital to million we in spent XX.X%

XX, as We continue of versus cash hand be integration excellent to standpoint, $XXX NewWave XX of on remain XXXX. a From had revenue a of approximately in September high-teens in net will million position million expect that capital we the December liquidity at as percentage XXXX. our for we for our $XXX capital acquisition, expenditures, of as

generate on borrowings debt-to-adjusted $XXX with at end, liquidity. which We approximately Overall, continued against million and quarter was netting cash our included significant hand significant of free debt, approximately term our million and cash $XXX debt providing remained to $X.X at flat notes. of flow X.Xx, after billion, us EBITDA balance loan

$XXX of borrowing approximately quarter as for our under end. facility revolving had also We available credit million

financial key quarter and activity to are business pleased services. of results, our growth top-line categories the with particular customer revenue leading in We increased in residential third contributions, HSD

all successful. working ready EBITDA steady margin our adjusted good experience We to to that goes and strong Shawn, opportunity now extend expansion the we're into about This questions. is for feel demonstrate that continue and core our and and future. strategy to growth


We'll Zack. Riley from question-and-answer first with now go Instructions] question begin Silver B. Please Our the ahead, FBR. comes session. [Operator Zack

Zack Silver

Thank great. for the question. you taking Okay,

I the spend quarter. increased this think first you touched marketing on

-- something kind of opportunity that was that that of is a that of said to maybe forward? Just a something it or And I bit, kind percentage marketing but a little is drilling more more we going expect acquire a should saw was was that spend, that moderate the fourth subs? as bit of we defensive in of going something that to kind higher think that revenue you line that you into an quarter

Julia Laulis

Julie. acquisition-oriented. defensive It It it's all. Zach, at was was actually not Hey,

for large acquisition, We did that that. typically on to strong The very brand and third quarter was us and a PR-oriented. capitalize campaign we decided is so integrated

the tasks lately, just part in we've well of XXXX some acquired We -- is We lower. brand-new to had that been time, had marketing at also difference VP as bit a spending spend related our really of NED. we that of the Marketing doing a was just gotten we didn't

wasn't to moderate marketing true. fourth full the in exact opposite and NED in normal go whereas I it So quarter. levels in the was expect into swing, absolutely XXXX back

Zack Silver

or great. your you've one response a seen just any other know rates days, I little advertised And the Web was data I kind some some early costing you per site bit of and caps data that that there's same packages then, on customer higher plans on unlimited caps its on I've month. speeds Okay, different with how those? have more And early by more, been if launched I take if could. has also got learnings but have the wondering, the data guys

Julia Laulis

option monetizing smaller allowing changes and between packaging to or we testing that plans. control increases plans to market-based people choose of talked over can about within customers speeds testing Part around sort we're centers of an and is in rather unlimited also stay more data they our and want. choice that tiers than that typical The get related either what where

it's well. with some changes results So going We the so happy far. implementing plan and we're on

Zack Silver

helpful. much. you Thank very That's Okay. very


Bisson question comes Please from ahead. go next Wolfe Stephan Research. Our with

Stephan Bisson

afternoon. Good two. I have

we growth, upper ARPU business. possibly and should the data going about you intensity, about high-speed in term? for XXXX the have we should XXXX we know secondly, on initiatives. capital a great How in unique And the How runway guys that longer limit data been then, all has year but teens, this forward? very think should First, think be

Julia Laulis

low been pricing has again reduced doing did ARPU HSD this rate everyday something been adjustment The we've because we modem campaign. integrated called discounts, growing. until large

catch as up but in they answer talk on the XXXX. of to really sort I'll let part of I you and capital the a Division higher won't are usage-based all run with for part. So tiers billing part is actually intensity that, Northeast a ARPUs. our the Cable significant growth ONE runway about

Steven Cochran

Okay, sure.

into think we'd higher high look migrated at the just a the capital than video-led strategy, start the than lot a from is a And reframing strategy using best the industry. we've industry standpoint. in clearly a this probably to we guide, an going HSD-only given intensity, guidance at compared have to we've the it's it. an people On the we much rest of make to the ARPU I the think lower on overall how a like number based we comp industry, us rest from look But, revenue of of away Clearly, as with teens. because that, customer as don't

EBITDA more CapEx CapEx sure, focus for of I as a revenue. as think of percentage we're percentage internally going versus to much a probably, on

as we industry relates of talk think not look the guidance teens, give to the I this on getting it's necessarily a in about the we'll that to to to it around think But lot the the instead. forward, forward, it because it's kind EBITDA down low we as as So probably move way going about into hard are comparison. think mid same I

Stephan Bisson

much. so Thanks Great.

Steven Cochran



comes question Markets. next Brandon. KeyBanc Nispel Please Our ahead, from with Brandon Capital go

Maddie Schrage

the just nice we're you're This because made us NewWave is planning I on of wondering, forward, that sheet and on completed. Brandon. assuming the was balance going using how Maddie the you give is clearly integration guys. recently could Hey, on a a almost for stocks move Schrage if sense

Steven Cochran


and So, a to to all repurchase with sheet. opportunities out always continue and be respect multiple to balance looking our continue to and there's both using opportunistic I look chances Clearly grow there figure shares of foremost organic and predictable think to areas with And first even our ways dividend. for we'll lastly inorganic.

Maddie Schrage

maybe a one expect ask Can of should cycles you programming could programming terms next in I follow-up. give what if your of renewal year? And you and Thanks. in where us sense are growth expense we

Julia Laulis

up forward. setting probably don't We coming what to renewals programmers. us comment accepting major And have of that the we think any growth I terms I'm in but expect not on to two going satellite going retrans aside be

Steven Cochran

Yes. isn't given that And going probably pass fact to the just anyway. that it I think we're all relevant, through it

for up pass the be best going whatever customer through and we to of bear. negotiate we'll them customers, And bill but that'll so that the can the will our contracts outcome the end we benefit to to customer the ultimately of do manage a cost will


from Philip. Philip Our with JPMorgan. comes go next Please question Cusick ahead,

Sebastiano Petti

Phil. Hi. question. This on is the Sebastiano taking for Thanks for

the Just about still a if strategy, of level. But just whether you triple-play kind now What to though high that, past. was just at you're as acceleration that about in the it different take it's marketing a in we seeing competition the competitive go-to-market you initiatives, broadband sounds some are us that update given your think to volumes you are spend then bit guys I terms in And the as about where more a from color add can bit aggressive. it well? confined most markets. talked net that related you've to type wondering elevated of rate related just

bit So between of spend just I little mean, well a that frame well marketing a the as as how is to there does there? the the and trying go-to-market results strategy? as elevated relationship

Julia Laulis


mean pricing strategy, in and go-to-market related types of So markets. different different to packaging I the we have

don't it's competitive hear to implementing until future. that that other tests it So our a I related think about talked And more about commenting you'll is what I today packaging bit There in about in you about markets our worth in pricing. our see changes markets the customers first. see us hyper little that are

the terms growth, packaging from In marketing of the pricing the only spend. accelerated it from It coming isn't coming as and is well. new

Sebastiano Petti

programs just projects? all-digital bunch are, going great. Northeast a just of Division this give on you in update XX-channel integration, on have and year a us the whether different completion where you and you timing it'd of us elevated of then some reminder bonding, Okay, terms give be Thanks. And us NewWave those Can of guys CapEx on. or obviously

Julia Laulis


this need to next essentially that on is there, NewWave so XX-channel all-digital year. is So completed for We go still slated bonding.

not literally, of conversion. As I we today today completed am of as billing kidding, the

old we billing NewWave's system. decommissioned So

customers of All also from billing well. as our are on system, one which not of but unlocks to only products come billing, synergies positioning our from

about at is to integration its were look NewWave if entire probably I'd through say cycle. So I bottom-line, XX% a

Sebastiano Petti

Okay, great. Thank you.


for conference CEO, now to This I remarks. like closing to and would session. President over concludes now the any question-and-answer Laulis, Julia turn the

Julia Laulis

Shawn. you, Thank

we moment Society number and off, of take of a participated who recognize in I Before recently a our IP sign want Cable Engineers' Telecommunications congratulate engineering Challenge. to associates to the

six of ONE. first the and challenge came Cable associates from nine finalists the in place One took our of

Our the talented years. in awesome forward Pretty associates group. We you joining new we to year. in the again look have speaking five to you call today's appreciate won and for this us competition last seven


for today's now has Thank conference disconnect. The now attending and you concluded. you may presentation