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CABO Cable One

Participants
Steven Cochran Chief Financial Officer
Julie Laulis Chairman, President & Chief Executive Officer
Frank Louthan Raymond James
Steven Cahall Wells Fargo
Brandon Nispel KeyBanc Capital Markets
Call transcript
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Operator

Hello, everyone, and welcome to the Cable One Third Quarter 2021 Earnings Call. My name is Bethany, and I'll be coordinating this call for you today. [Operator Instructions] I will now hand the call over to your host, Steven Cochran, Chief Financial Officer at Cable One. Steven, over to you.

Steven Cochran

Thank you, Bethany. to Third welcome Call. XXXX and afternoon, Cable Quarter One's Earnings Good glad us join have we We're you results. as to review our

proceed, and uncertainties. to like contains to I that events we future risks discussion relating forward-looking remind involve that today's statements Before you would

from factors in materially today's SEC and as our forward-looking of can earnings except to by find and statements. otherwise. One's expressly future filings. results during disclaims recent could update release that You One statements Cable alter Cable law, events is discussed cause under or obligation, actual to differ no obligation whether the call, any as today's new or required its forward-looking a result in information,

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

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

Julie Laulis

Thank you joining call. We you, everyone. appreciate and today's for Steven, us good afternoon,

increase year. incredibly the the solid team was one and pandemic. delivered XX.X%. was the marks deliver prior which On a adjusted increased continues margin margin now quarter the of quarter revenues quarter presented basis, the and we Adjusted operations, XX.X%, prior growth consecutive impact particularly EBITDA XX.X%, by the adjusted I'm excluding have XXX-basis-point respectively, a to by Hargray X, acquired quarter. year with on EBITDA added third and The XX.X% compared which and XX.X%, of next, our strong from X.X% challenges EBITDA May adjusted increased to in proud Revenues is results. EBITDA which over the year-over-year XXnd by to increased were and by year-over-year

the are execute that result We growth consistency core of have inorganic of that organic of data-centric our to success. executing backbone up lie is competencies the around and a a strategy, strategy ahead. as and opportunities we built truly unique and the this sustainable both continue is a result consistency direct believe Our our that who people,

of towns there than demographics, and of make take provide our Since days, operate we market like and just America, a our across aspects of have are our operate differentiators. While unique, key provide this Despite broadband large XXX products service download a with we better many I'd rural that to of us only to company small consistently our intentionally measurably moment cities our XX% to where we in apart rural we chosen driven XX% predictable few or highlight and providers. in advantage, competitors feel underlying Within services, services risks product alternative and video an setting broadband linear higher. to services. from megs continues speeds higher business favorable highly from today, and than of ourselves revenue that every HSD local years peers, insulate residential our the reliable, experience a in is mix as includes low-margin that competitive exceptional Due of competition video our advance more pivot our marketplace. from to is creating by us if customer market by our high-speed, value-based the early margin trends strategic

is to in sheet have acquired of the With rural successfully have we with broadband come. Finally, XX a U.S. identify transactions we across this to design, we accretive are partnered on by we believe that proven and assets are continue the a investments balance the to years aggregator confident flexible natural or date. we will

welcome we CableAmerica. investments, acquisitions would of like new from and our to Speaking associates

will is we call. exciting investments be closed you on excited well when as the And we bit family of have a very this brands discussing join Cable other news the some our after to Investor makes tentatively of pandemic Provided this later full during in around that business XXXX. recent environment One our are share our the even travel, color as our for transaction. We more Day, the appropriate on of the unique fourth scheduled earnings for we planned to quarter spring year about release what hope

Hargray remained XXXX. third churn residential customer HSD residential we growth to high-speed customers that added quarter, connects same year-over-year basis, On by nearly highlight basis, and XX.X%. Hargray a to growth the significantly added lie results our Turning HSD both These above in we not only come, total customers. pre-pandemic XXXX, operations penetration that we far when HSD our for outperformed Internet residential Anniston well bringing both In also service, the in approximately driven trends the XX,XXX but significant excluding on a and have how sequential QX to ahead. that opportunities period in were contributed XX,XXX

X.X% grew higher by both to by ARPU upgrades tiers. and sell-in our speed HSD driven Additionally, year-over-year, residential

prices for not before, our As we've since XXXX. we mentioned tiers Sell-in increased tier, offer speed gigabit XXXX, which the have footprint, actually service rates higher XX% our the and our legacy the at on on decreased of for our of we quarter. fall of systems reached now across XX% we start

virtually Five to of for well industry just unserved to markets though. and implementing for bring we In upgrades speeds needed for future. well the speeds of areas is have underserved our to HFC level counterparts. consumer the launching multi-gig groundwork ensure support the areas. network customers been speed As consumption to continue as playing stay before the gig to the million-plus in are are Through to early the our Internet high-speed gig one affordable our across the vital of that just capacities future a able access in story, urban and a broadband curve. rural proud to roadmap, as nonurban more residential previously powering XXXX, field XXG or short, is digital where extend network as the serve, ago, beginning ahead the are technology began many building we U.S., we Gig markets years reminder, were we markets service unheard of we and symmetrical in we to the our with as laying service of customers to

during our growing third upstream to from come continued result As delivering speed on. perform hours our a XX% downstream per Despite have XXX-gigabit network the quarter, count to well, plant investment, customers usage XX%, to continues of in utilization XX%. below improved reliability month average and data our maintained our and utilization peak the to

services. business to Turning

this of operations. excluding and continued growth Hargray momentum Anniston revenues to X.X% XX.X% when positive show quarter with Our year-over-year both and

continues strong product should away connectivity, where out basis. X,XXX video shift sequential on investments continue return from our minority phone and predictably. and SMB grew data quarter a of by and approximately our to expand mix enterprise residential HSD another to growth, round As to customers To toward our margins business

are customers shared in these not these value the While reported results and our strategic highlight results, our partners. commitment of

integrations. to Moving

with pleased making progress teams area. are this our are in We the

Cable Hargray plan the execute X-year with associates our company good Fidelity Hargray, fit against. X,XXX to as the have is talented in plant At diligently integration and miles we a One. side, about roadmap, nearly on and up we've preparing continue levels. completed Sparklight acquisition On of who are seen nicely our upgrades great teams margins moving that been metrics very feel we working with their to since operating the very

have our telephone realized $XX.X October, quarter, provider network hand Fidelity highest to and to markets with a approximately growing our In XX,XXX The drive into high-speed note, forward alignment use results markets thus On HSD pulling opportunities. rural M&A. in to is to and operations throughout and with related as to expected transaction with we our future ever markets of a in to We've far. well financed million as fit Missouri from expect in customers customary agreement service is cash CableAmerica Due close into believe and culture, profile, million purchase Missouri. to a growth network for purchased Turning comes brands. we compelling CableAmerica additional the be great Central year-end. expanding of excellent this on adjacency for the basis spent cable an subject Internet, growth. entered materials in our CableAmerica's competitive its building an adjustments. fiber be we In to early we on $XXX to to we debt-free expansion, prior family capital a cash expanded post-closing

Hargray market While both of of stand-alone potential expect this these One. internal a joint fund contributing also and tower Fiber, company these Clearwave a growth majority will while we've interest equity improving profile business growth. significant the trajectory in certain joint identified buildouts venture our efforts assets and investment of deleveraging One continue, cash potential exchange the flow we will to venture, new accelerate that In transaction would Cable the in partners a accelerated free its cash minus for make Cable the will newly while formed receive

this the entered consummate We Organization, Cable subject greater yet new Chairman Pritzker owner. company. systems. CEO previous and CEO One's accelerating serve This President current with the Hargray's venture. and and cash acquired Gottdenker, stand-alone that previous higher free to Hargray Executive margins and This Armistead, Mega joint and remain and proven current our flow. negotiation Chair venture and also the any business, of allow definitive as Broadband; and will focused to and can market Stephens be have and team team terms a companies transaction Vice GTCR, primary Clearwave's are owner have Capital, the partner agreements serve proposed remains dedicated in rates, in increasing Hargray, on the will allow partnering would partner to on to will expansion not driving parties the hyper-focused into of us at as David our Whisper; recently time, integrating Michael former penetration existing our At of Senior former

there assurance the be completed. joint that be will So venture transaction can no

of Cable best, agile confidence we look level. unwavering. One execute will results confidence our the in in our to we outlook what as future, continue long-term and the And remains strategy. us highest The to give continues strength to our consistent Our at do remain do

paid a One Before the family a hand Ops could the call put the the for associates faced, Mover we the issue the challenges first to family across on past across all we In every Cable additional few the associates recently an off. XXXX without one to associates our in to each have our of with have in with Magazine We their for day gave events recognition that acquisition briefly I time starting this all our and the so over want day history work and our Day congratulations as Cablefax brands. the spend our X.X and Connect none big touch One Top of Cablefax been tireless by I work of recently several many brands quarter, our recharge ones. our relax, years, closed was loved M&A MSO of and created during call the notable and in dedication over other offices past time associates. over of Cable connecting for their associates our could of integration years achieved recognized Steven, the which

we to critical most, it's to them. for matters it's and our those keep our While care associates for as to closest themselves equally customers important to what connected know

we Additionally, in recognition increased hard associates, frontline work our targets. bonus their of XXXX the of

through Steven. Charitable in share that Fund, education community footprint The hunger support $XXX,XXX Fund, our relief in the grants in and in in Giving be local development. January more to markets we the pleased month, which generally launched organizations nonprofit digital than am this to nonprofit XXXX. of awarding to which will charitable company's concentrate awards organizations and our now, I across literacy, Finally, XX-state grants areas And $XXX,XXX later Giving

Steven Cochran

Julie. Thanks,

we approximately Hargray year again to turn $XXX,XXX levels. most Exchange by in quarter million XXXX revenues business Cable acquisition. which customers outperformed Hargray operations, Anniston million included To our Of This third quarter services $XX.X October the a revenue were in HSD growth, a One XX.X%. peers compared $XXX.X for increase, approximately operations let's HSD the But Hargray in likely to prior give suggest XX.X% residential increased to increased Similar this Revenues year approximately third increase. both by sense have HSD and quarter XXXX. the once X.X%. from gains excluding revenue XX% increase HSD a our and of in increase of quarter, the residential to business to in of that XXXX of of Now in industry, XXX,XXX X.X%; XX.X% the revenue was by were residential our fueled million by XXXX. service would return $XXX PSUs third results. XX.X%; that Hargray data a increased seen year-over-year. total the revenue revenue by when to Anniston earlier same XXXX we Residential would XX,XXX net our period contributed these, came grew or and of in

million to tripled XXXX. Operating in driven in quarter. to customers or fluctuation to compared each a than $XX.X programming a quarter. of the of third in revenue to from quarter The year we growth the at by added improvement the revenues compared this $XX.X organic quarter, time of quarter XXXX million so. quarters quarter more has XX.X% to three do acquisitions, our doubled and $XXX.X the expenses will through expenses of largely general of were to were the or in prior year In quarter labor XXXX in year in XX.X% cost. Selling million one of were administrative expenses prior of compared various fact, exclude XXX-basis-point $XXX.X our and XX.X% million in for contributed These the third customer the XX.X% our the certainly expenses and XXXX revenues have likely revenues continue if third the and prior the closing we of pandemic nearly of year, of decrease next and a

result bad last As QX already against spend reminder, of items, elevated marketing we health insurance during other comparing had debt we a a as demand lower-than-normal reserve, a among time, of and large which portion cost. reduced are our reversed of year

the of the the our with the had for Julie in $XX.X also This of associates quarter, operations, to mentioned Hargray hard call. million frontline $X.X million costs addition accrual in SG&A associated earlier we that a catch-up work bonus

remaining cost a longer the on $XX.X third was while income our quarterly with options term, a in always loss the adjustment associated maintaining ability $XX.X million. be interest efficiencies level for Mega included Net in equity firmly believe over fair quarter lumpiness drive of and factor, service. Investments. the call Net noncash put high value will While Broadband a acquire we million the to to income

of EBITDA the next. the could Net cause from financial per subject in fluctuations these could This mark-to-market fair used mentioned. valuation, fully income noncash accounting results was year operations. changes Hargray to which reminder, the Until options increase $XXX.X or loss a a the expire, quarter. to the on MBI exercised our $X.XX As the are from are Adjusted quarter, a $XX.X increased one to assumptions in from GAAP any value basis share on quarter options million diluted the per million quarterly in or was basis. their decrease non-operating resulting third for determine share, just turn prior XX.X% inclusive including significant

XX.X% Capital when equates Our to adjusted of adjusted expenditures XX.X% Hargray which third operations. excluding quarter the EBITDA of margin totaled XX.X% was impact or million the for the $XXX.X XXXX, of EBITDA.

million the million, invested of integration network total million million our $XX.X year respectively. CapEx quarter, $X.X activities, we for expansion During and bringing and for and $X.X the to $XX.X

proactive largely by delays. In our to expansion and accelerated our have around midst to concerns addition support forward quarterly to is pull capital, continued ensure chain driven supply growth increase of we the in spend materials a

$XXX our in share from in resulting million quarter At From the standpoint, share, dividends to to free CapEx by $X.X convertible and EBITDA quarter $X.X lease just less in quarter September our $X.XX equivalents shareholders of quarter-end, prior quarter-to-quarter, continue to a from discussed. million during XXXX, consisting $XXX approximately finance distributed XX, overall, had capital Adjusted capital billion strategy. $XX.X million of million $XX.X the third liabilities. $XXX deployment million as notes, While term capital and from was unsecured approximately year of we as a of hand In vary increased of being quarterly cash balance nothing debt million was in liquidity we notes flat our $X.XX and billion, has generate the third long-term quarter. cash loans, flow. increased spend for dividend cash on approximately per changed significant the driven in $X will we the expenditures was in the per we and

also approximately the LLC, to residential XX% Internet the million we under into end of to quarter, in adds investment Holdings, closed This against We netting borrowing had debt as additional made than revolver in partners X.X investment held serving transactions. and October Broadband. Overall, XX. entered Eastern three last September quarter less for privately in available $XXX adjusted as GTCR, million a in hand also X, business our EBITDA with After or September rural we after our current $XX on XX. service debt was our annualized of Broadband of a On cash interest United partnership a customers areas equity suburban Point for Mega our and ongoing States. provider times

assets As entered on the agreement subject million a cash we to before an customary into the $XXX on adjustments. end liabilities conditions, of purchase we data, to post-closing and provider and certain acquisition close The certain a to to X, service expect voice earlier, of customary and CableAmerica, in basis, year. from the debt-free transaction video assume is closing October subject discussed

for Corp, another million. a $XX.X way company management telecommunications. less XX, Lastly, Acquisition with experienced on special than as a equity rural partner that an Tristar we to October interest on see team for is acquisition completed purpose in XX% We minority investment ownership this focused I

questions. lead our now incremental Tristar for the we that, in With One could for believe with future. also opportunities relationship Cable We ready to are Bethany,

Operator

from Please Our Steven question Instructions] Fargo. comes go Wells Cahall ahead. first [Operator you Thank from

Steven Cahall

X adds And only pace I broadband really sounded passing penetration pretty the you is times than think being around XX%. net more of XXXX. on your residential year-to-date Steve, Thanks confident still

just you sustainable adds, I'm like low the us you're that that to is that in think ahead? that net doing trying Is feel terms a think, for run for So quarterly millions about? rate to is good double-digit something of periods

Steven Cochran

as you the catch what Repeat rate that. didn't said I because run

Steven Cahall

low as digits, double range $XX Yes, so something sort million, million, number. of an organic $XX that in

Steven Cochran

correct? mean You thousand,

Steven Cahall

Yes.

sorry. Sorry,

Steven Cochran

other So felt trend to say XXXX. our back think about we ability continue to good that to deliver hiring. we guidance given toward We have than not things

broadband residential XX%. Our is penetration to closer

total business see mixed to feel growth continue I that include homes think our than which in ability passings that. sometimes what the about at to higher think look totality, But as pre-pandemic, we because and we I we passed, drive get numbers people toward rates and continue to well. did the really service good

Steven Cahall

growth just Great. the about on should I you in think the the integration? your into the from were And Or year. where then was quarter, half Anything we the any Thanks. X%, read Hargray's ARPU is ARPU? other Is I of effect in that? data residential think, and X% first residential data mix that thoughts

Steven Cochran

I there a a mean that the decent from you just given year number, truly mean, I impact year-over-year. think coming Yes. last I leaving of there's look amount Anniston and in in of is when Hargray just noise the clearly, at

we mid-single-digit the think on ARPU HSD are pretty product. I a what consistent is see to continuing increase

Julie Laulis

and both our playing customers. those minds of versus growth sustainable good as levers intentional in the we've of unit the balance is actually long-term ARPU growth It of the with been for trying value and to growth

for fit. that and service we've XXXX. up been promotions since it. experimenting lever not having doing pricing is down But we the we growth, a as with system One is it as Remember, things unlimited, in effect well. have now see done into we a on or wouldn't an much that increase strong I too and can read It's around legacy our that the while of and

Steven Cahall

thank Yes, great you.

Operator

Brandon The your is KeyBanc question Nispel at now line open. comes Capital next from Markets.

Brandon Nispel

Great toggle side, sort that as you had with like venture of things came How give I much fiber, you going? could joint wanted going have of in of margins think on do the which on where would just to yesterday. spending percentage capital going expense today any SG&A specifically, if then forward? And Thanks. to you color us more the JV? we And out potential see the see you're that X-K ability do on you

Steven Cochran

Sure.

I incremental our will the mean a how I of on there's have hit question think internally. is would versus removed take what figure from on we opportunity that I So partnership. first what numbers out I tried so we think one gets to the

partnership I beyond to what even And this is allows so do think today. where us accelerate we're this at

of lead in dollars So quarter I on. it, were if level, would we year-to-date, $XX the in we did we call quarter We the million that that in spending to added just the millions think we've spent toward just gave that earlier numbers third. thing another fourth the us which at similarly did same low-XX the

it. an challenge we as organization completely because flow, great to of of or after expense, reduce see put [indiscernible] because And actually go our of do to will so What go in capital and that within footprint. two more was both well place, level number is in have and ability We some a still to to that we platform lot be a lot able our to tried a being as cash impact is lot number. negatively of that really we expansion truly do won't margins a a we to if the going accelerate free that will our to and like people, saw platforms great able

leadership Additionally, that and our company and when business. able matured there's bring a be together then it's to we're the on think XXX% leverage a takes a go the a focused opportunity a leadership outside to this road lot to to as to and arena the a go and of team it It team history back already to and ability issue, focus their this with operate really leverage allowed down to pull people about too. into then a be a set stand-alone public and company lot comfortable of to and

Julie Laulis

I us. I time we of Related spending Brandon, question. and by to margin the what you, think give don't with guidance, tell while virtue can And

call, I discipline ties that. be a incrementally term. constantly we and to We of expect we continuous And over think I a it our in the would that continue focus, can Steven that would long see referenced better. toward just believe results I into you drive And improvement mentality. have, And we what that things this. making

Steven Cochran

and to it I thing try relates manage we think don't quarters very is, one the intentionally we as this specific per Yes. quarter, also we do to don't Brandon, And se. don't

year, We months in on first year-over-year the year. that. expansion quarter margin we the the are XXX-basis-point of why last of focused really the very we're any given had ups in in improvement feel at long-term first we trajectory sure may nine that looking compared that downs gave making on to months we the seeing good and see the and take any focused while given place. about And that's number we've nine And that, and last year-to-date

Brandon Nispel

Okay. Thank you.

Operator

[Operator question Raymond Louthan Instructions] Our comes James. next at from Frank

Frank Louthan

talk the in you you if customers EBB you thoughts a from thank impact can going then those any And that? saw And Just got follow-up. curious, if quarter, to on forward? I've Great any

Julie Laulis

taking opportunity a that funds use broadband these their driver are us. large And to It new So approximately vast EBB customers been they're has customers is, The of customers. XX,XXX not they of we taking stayed have existing tiers. majority fairly new customers number customers to on coming a speeds time. the EBB increase at basis in for consistent. The are point of this EBB the daily has on, higher found

Frank Louthan

types any changes the And you Okay. adds? lower gross demographic trends those have seen have you with your that looking in offs gross adds. in were folks any some trends? of in seen Have regular you. forward, income, more Some Great changes the in your peers drop of seen of thank

Julie Laulis

were and I at look it. look it no. just talking about morning. we like our a our before. took customers customers I Actually, Steve this now And

I slight marketed you in But I We which tiniest chatter We're sense. customers, the in makes given expect have that how see talk not would market. the But different. actually of believe uptick we lower-income and our past which we demographics about. heard do have it a just

Frank Louthan

Great. Thank you much. very

Operator

the We no questions in have further queue.

call to So and back I'll Julie the any remarks. for closing hand Steven

Julie Laulis

joining all Bethany. and today's us you, you again to appreciate Thanks. call next with speaking Thank for We everyone forward look quarter.

Operator

This today’s joining. call. Thank conference for concludes you

You your may lines. now disconnect