Consolidated Communications (CNSL) 29 Oct 202020 Q3 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Consolidated Communications Holdings, Inc Third Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jennifer Spaude. ma'am. ahead, go Please

good Communications' would call. third and everyone to to Consolidated quarter morning. you, like I welcome Thank XXXX earnings

the Childers, Bob Executive are call President On Chief and Udell, Officer; Chief our our Steve Financial Officer. and today

open we prepared up call will our for the Following remarks, questions.

safe financial includes financial can certain Please that the proceed, also section Investor include I statements SEC. release, of you about discussion affect expected provisions future financial uncertainties. be in are consolidated.com. presentation non-GAAP and certain harbor our our remind is we and X forward-looking the all events presentation. of which found to the Slide and consolidated Relations subject review at results discussion that with discussion Before may Today's results future Today's and earnings will website, of will A statements on measures. factors posted are risks contained on filings our

Our will to earnings Udell. release includes GAAP to turn call now equivalent. Bob measures over nearest the the reconciliations of these I

very adjusted quarter trends, in and and our our results a you, it of third results results everyone. execution resiliency on to with I'll our revenue today. you're strategic an and balance pleased update growth going and new kick partnership capital new and financial doing well Steve EBITDA talk enable sheet. an with we've improving growing and I safe. our QX close overview business the things I'm very both and morning, that Wow, strengthening business. Thank that all future-proof staying about discussion us got the Searchlight. the with will the of to hope our great good strong on fiberbuild overview on imperatives off structure. Jennifer, strong to return demonstrate an strategic to I'm and our the plans provide will

included we recapitalization, growth new debt. capital both I'll a and discuss secured which quarter we completed global our This a In which structure recently our refinancing in third which investment capital addition very billion strong bolster in plans, and a significantly new results, to strategic $X.XX later. will infusion raised

me let a path years on and capital transform that's allocation the X.X we to this ago look set we expect when XX liquidity. in will sheet, months a you and transformation have out business continue today. First, deliberate strong done. capital fully balance now and very We we've do exactly Consolidated another that remind Communications' announced with plan, I to increased from the foundation different a to what

quarterly work connectivity wherever connecting than to communication an our the People into on depending remain customers more connected. they jumping results, in provide and keeping we new let Before me are update ensure into than people services normal, continuous We and this impacting In and a now technology play services our fundamental solutions, for role and working ever. ever how pandemic high-quality reliable consumer, them. commercial harder And turn critical live. on carrier business. is are

certainly changed quickly has we our team determined and have As that in ensure we to how adapt are a resilience to adjusted as we COVID continues past and six but the look to operate, on fortunate months, needed. has back we're business,

have customers as to impacts business our material time, continues have implemented architecture network we our we increased proactive kept Our this usage. result not of immediately safe. successfully measures the any At experienced the traffic and and handle pandemic. The a employees to

revenue broadband very services solid Revenue pleased with I'm results combined track transport and trends Starting to to grew delivered the which data turning stream. the this demonstrates we and third transport and our contributed quarter with our in we consistent growth strategic operating overall stable year-to-date. further commercial both X.X%, of carrier, recent expenses quarter with Now results. results. and in lower data and growing record

is prospects. active XG wireless new channel carrier and backhaul fiber with Our

excellent job opportunities. doing strong upgrade is relationships and to team sales of Our collaborating maintaining an carriers closely with identify

X% totaling X,XXX increased year-over-year, connections. approximately Our tower connections contract under roughly

capacity, XX.X% fiber As build vast increase new to majority carrier-grade allowed network year all investments The out a totaling channel, groups net contributing on opportunity ensure new from experience, to see response of we XX,XXX. which and across correlates upgrades to us recently Home, are launched our sales our our and we approximately providing our and business business VOIP We removing residential a ago, up year-over-year. needs ability customer working increased demand now. customer bandwidth productivity customer This upsell to for customer greater to on commercial support and retention. continue and internet to margins, full-featured direct to clients class ultimately best service net, communications is higher which the to XX% Within at priority a commercial employees, unified Enterprise when obstacles ProConnect from our remote provides service revenue right locations. is for buildings of to

launched In Microsoft and to Contact Productivity all Webex addition, we Suite expanded markets. Center our

and Our sense hybrid the approach it sales environment them. for commercial market team's of customers CCI virtual makes a sales where tools using fits Ignite to meet

the turning representing quarter revenue of channel. revenue grew broadband to sixth growth. Now consumer X.X%, We the broadband consecutive

fiber fully California we service, Texas accelerate and England, in and our CCiTV, is excited Our will recently growth Illinois. broadband launched more services and XXXX. which New Northern even this our are expansion, are in most video streaming competitive, about in

bringing speed selfinstalled own easy and We adoption continue majority capital CCiTV. with their the higher of intensity This compared video. device traditional to reduces subscribers the broadband product to see

totaling in We approximately have nine public XX,XXX passed private homes in most partnership Hampshire fiber builds process complete. when New

CARE's well late public-private otherwise This These opportunities rural areas Federal communities density through or in and with to us for be that all fiber early gives partner slated funding. completion justify agreements to are would additional community in financially. us XXXX public-private builds XXXX. positions difficult Our nine

and experience. more best-in-class third details financial laser-focused are executed right across to on has will stable accelerate channels, our our the we're will We provide service our now turn all been build well priorities. on plans teams fiber consumer channel the our consumer quarter. over call to of Steve, Our and to Steve? I for eager three results customer who growth a

morning, Good everyone.

said, it results happy quarter, well our structure. exciting share you and quarter overview to details Bob and strong with third new was a to of provide I'm capital As as the as our an simple of an

realized summary for the This $XXX.X result more improvement which financial X.X% a Slide Our of channels. compared X.X%, presentation. of on X customer totaled than third of performance all quarter the our of continued the revenue quarter for a is Xx is year the third the decline begins ago. to Operating million, a decline across our strong

$XXX.X for of continued quarter structure the or and $X.X result trends a revenue ago, improvement, million X% was a As up improved year from third cost adjusted totaling quarter. EBITDA million

review and carrier, with let's totaled revenue quarter. Now where $XXX.X revenue the starting million commercial in third

to on X% Before of revenues small carrier as revenue, moving due want total of earnings I note into SMB discussed impact that, and commercial or are to our calls, the potential prior business, revenue. approximately component each of COVID,

is $XX.X products by today, approximately and impact the $XXX,XXX to we have on not quarter business revenue growth purchases million flow COVID-XX recent which fiber seen of year to down material to or the the transport sales. to investment on our due Equipment than seeing new reduced revenue ago. X/X totaled addition equipment continue margin customers will X.X%, more the the to in sales be million decisions of declined continues trends. and this SMB be period, Commercial lower in to and our a we declined earnings nominal. due enhancements. X.X% As expect cash is cautious a area stay was network we and deferred conditions. as voice economic economy, from with and fueled The $X.X low $X.X Other be by Data grew product our This primarily current in slowdown are change and revenue equipment million. in revenue nine-month one a

turning Now third down quarter. million $XXX.X channel, revenue totaled or revenue $X in X.X% consumer Total our the million. was to consumer where

quarter the increased decline in or ARPU second $XX. revenue Consumer was channel improved for growth the However, X.X% rate row. points Consumer the quarter now the overall year a a third $X.X grew million year-over-year, XXX sequentially and the quarter consecutive basis showed totaling up for ago, recent quarter. sixth and for from broadband X.X%

competitive The reflects flat access our and decline In video to million, revenue $X million revenues was ago. services. newly Consumer services RDOF in from streaming voice declined revenue ARPU. to million auction, reduced expense leading was it a Rural remain more of specifically starts and is is areas, or and the run Fund, broadband, approximately The to per retention. revenue CapEx. offering, in programming access to With attribute reductions lower by declines as rate. higher in consumer with and strategy Our our part, working bundled in broadband we at decline decline the Opportunity respect to this robust be contributes due $X.X broadband quarter largely in which strategy higher an this in was Video X.X%. upgraded which to almost was special offset X% Network year-over-year. declined change and with $X.X Digital as expected down driving year well voice a We participating will today. retention million subsidy voice half over-the-top $XX

time. bidding rules, strict options we comment process continue to We at the this will cannot anti-collusion to throughout further evaluate our but FCC due

And operating million services and flow costs down lower to in Net and $XXX.X the term lower operational programming same driven and million or and by the Now and declines from is turning and products company's was consistency recent $XXX were million X.X% for to at million cost time, million, Cash be totaled of decrease to excluding a cash due reflects with Cost million of with of decline $XX.X in million repurchases million, loan million The distributions year, in quarter ongoing $XX.X up X.X% a the ago. compared million our $XXX.X in expense and periods. we distributions. in rates range year. million quarter ago. expenses, declined depreciation associated $XX period benefits primarily improvement reduced last in we Free this The distributions expenses $XX increased quarter prior have of initiatives. was to share of share $XX interest the compared $XX.X expense to to lower the senior the $X.X in totaled $XX.X improvement visibility wireless At third savings full was the operating the labor combined wireless QX the expense to it due in year in other million million, we expect wireless. notes and per beginning prior $X interest company's the million $XX year. in Adjusted year year-over-year of salaries benefits from Year-to-date, the amortization, primarily efficiencies. by $X.XX received depreciation year-to-date. to have quarter, and $X.X year was from approximately video million year-to-date. the variable an expense. a cash on SG&A $X.X the results Verizon XXXX. income net limited per operating $X.XX from CapEx third partnerships

Our and fiber projects infrastructure supported broadband spend success-based CapEx network expansion.

in plans. million. prepare availability our fourth As million and for our build CapEx we $XXX.X expect be we cash $XXX expansion plans a growth as hand on we pivot start and our fast on liquidity, to under to full in year execute XXXX was at approximately including on least quarter, revolver Total fiber the

we trends made notable have Our our costs, and business revenue we allocation capital have and ability plan. on is and strong manage progress our to demonstrated and stable, improve

times. to net sheet, flexibility, recapitalization X, liquidity times million, have debt the actually the leverage we us and enhanced the X.X of would Xnd our now the third approximately leverage debt we and have the ratio at X.XX recapitalization, the an target allowed by Our even on which of and $XXX forma October quarter. end at Pro increased X reduce for improved achieved of year-end closed been times balance our beginning stronger maturities. year We from extended October

credit bond The X-year refinancing, and $XXX on million RDOF, debt credit of floor, XXXX. a with rate plus requirements combined of or of coupon and successful X.X% following been LIBOR fiber are a X-year with with to for greater strong support investment, at facility, $XXX us lenders million the senior coupon due the X.XX% strategic much notes priced X% to structure provides secured investors at pleased consists respond expansion secured upsized the a very loan term our a in support financial revolving to $X.X We growth of of which flexibility with plans. has This our a billion letter the refinancing. from

full the We or XXXX. will not be reinstating guidance quarter year for fourth

offer will the quarter, overall economic However, on fourth COVID-XX effect in the with we persist, results. crisis threat the to our from Uncertainty navigate pandemic-led continue color. around nominal the following we

all However, are of employees we our are very closely focused on business, aspects the our we monitoring and and safety of customers.

the We September as snow our to expect within of of the XX estimated New increase year, could million. off will Last voice, for mentioned for birds a warmer at we be some and plans, to the CapEx quarter weather. have primarily migrate quarter to growth residential fast full fourth fiber net we year, and Northern accelerating Searchlight, data in plans in for million XXXX. $X.X to operating to impact levels build We with start-up get the seasonality and we the announcement expansion see normal new expense and in to the price markets addition been quarter Since fourth our England start announced $XXX being the of the I builds least fiber we a about as have use partnership earlier. revenue, fourth for

And to Searchlight over to With respect be the turn the and We with fourth quarter our of Bob interest electing for discuss capital the back XXXX strategic call will pick new we XXXX. Bob? now to priorities. have outlined throughout I'll that, to structure. investment,

consistency of us results, and our with strength quality helped The of assets Steve. Thanks, the and our of strategic our partnership the Searchlight. team attract depth the

of partner the addition in development and experienced their an to investment. industry and gaining capabilities brings are knowledge research valuable We who

are infusion accelerate and to Dave our to Searchlight's of ramp Fuller their next as capital recently expansion designated refinancing Board fiber one board our global We have welcomed our allows and our year. pleased members. growth plans to to enabled pivot beginning us

more us on We enabling deliver growth. homes superior than upgrade million revenue initiative are a across to passings, we investment multiyear provide all three with will service and addressable embarking X where channels fiber, customer

in positioned even growing provider. While an expansion we've bolster successful immediately are fiber our been to competitive become now broadband, plans and we more

finishing on builds. our focused and and into on planning are already the accelerated strong, the We fiber deep year we are execution

and include homes fiber to firmed XXXX. XXX,XXX plans, up speeds have have We experienced construction our upgrading gig which teams in

plans improve customer services our significantly provider. our customer infrastructure, digital project a best-in-class become expand will fiber-based broadband as net XX% network more of to market. The We and near experience than dominant accelerated create and transformation to we will build our fiber a boost our speeds leverage fiber addressable gigabit significantly

transformation, which Slide As we imperatives, enter sharpened the next phase strategic of our on investor our outlined on XX our growth we've are and in focus deck.

First, with with strategic partnership investment accelerating our growth and we're the significantly plan Searchlight.

and exciting will very Our for allow return team. top line this to this return fiber to growth, to growth is us expansion

and work we the Next, three experience most the past we'll assets expansion customer leverage services. fiber across as our our channels as competitive customer have and we and deliver in best-in-class to

growth, all complete projects. highest our providing to flow continue the build evaluate consolidated target We'll Third, accelerated substantially for plan. our free liquidity new runway on focus extended cash enough expansion fiber expansion and increased portfolio business we return we'll as has fiber position in maturities be to plans. to capitalization And assets for to time on ensure fit. assets to I excited executing course reiterate long-term normal how all our what fiber closing, and a have of is are strategic a an want company our In this to important our to

guided an more we'll business, questions. management I to for experienced financial operator, future the significantly stable position. With strong, that, a what have We holds. take a couldn't and excited team improved be be

Our from Cowen. first comes question with Williams Instructions] [Operator Greg

You your with may proceed question.

distribution, have it the is visibility, your could right on comments the heavy I at that suggest million that was it guide take and it a seems it looking you year, million it to $XX is still costs just you million, place One some fiber trending did the ahead. couple like heavy trending said A quarter. $XX cash but in don't on at the $XX you in to promotions you reinstate of the but iPhone question not the should maybe that way seen the where deployment. you're not is, guidance, mention the if of of I north start-up the like it's you acceleration for getting but full you typically second anticipating know past? quarter least you But just we've in end, high your of at Nice looks as Verizon said questions. EBITDA that, The be did EBITDA fourth

some When should provide to the Can will the some with build in us is you or margin in unpack maybe on more you the one in would Where last plan a fiber fiber maybe homes will loaded just How measures help or build? the or or you fiber in providing we engineering cadence? you trajectory? now XXXX on fourth how milestones be up? passed more color such of can front-end many about And be just with the do and And start-up quarter more success think be you So acceleration. planning? ramping build the costs are linear?

we're remarks, the and I Yes. start I'm And have distros we're at load But passings question, more found let we always of EBITDA, up I and me like of with cash minimum. did, And just by fiber we get New unpack we state that Greg, there's will a passings let Verizon economies a when the comments on looking we to overachievement. York in of each nature in approach to builds I he'll really of probably the sure. a so the first, that. be we're to pick in little on the to said that. find, market, that's one I'll last address engineering me with, would past similar targeting. our And cadence. added on the usually that's cadence we find XXX,XXX find bit in and What and that Steve location, build think this as the start expect that, We each prepared XXXX, conservative

partnerships that see to is I think X earlier in XXX it Act is give minimum, we're in you that two-thirds example, fiber doing I or very XXX of rural we build that teams, on passings an upgraded mentioned we'll those and about a a places. the taking of just CARES What with on wait XXX,XXX fiber now the in to So jump miles days, get gig mean, public-private to XXXX. we'll we're right roughly because they're for

rolling, already we've have infrastructure bolstering cadence we're that out the we sure is we not of a construction particular, of pretty of got passings, England, the So time teams, market in risk but that XXX,XXX coming XXXX. available, those having what harshest winter the strong New in and of end doing Northern that can making have no by

and back-end of we're that the somewhat in so product give by to top from for user. this upgrades we us I the can experience. XXXX, a through can way the experience getting some just doing the and end loaded electronically to in bottom adds that flexibility all be transformation, digital the We're net simplifying service really customer customers think on reliability to fiber changing the digital effort will interface significantly nature order benefit the of user all from

we are doing with across through kind metrics will addressable then that team, that build that metrics adds planning. homes of the available upgraded covers I and yes, the share, track and have still the we're And Steve the those So we, working areas. we'll that in how and cadence the the

Steve, you that. to pick do more up Verizon? come on want So to on

Yes.

the Greg, So for thanks question.

QX. to are so for to to $XX did over we the Yes, I trying So is point QX. million the was we expecting make going that I level not in receive back think And same receive distributions. cash Verizon

the $XX I past then to to guidance. time, this will And think Again, visibility EBITDA full not $XX expect be number, us to we about unless giving year. surprise we above in limited that we Verizon. million be for you to million point number, think or but from go have range the million I would above if the $XX have the the a at

giving just material more the more get might not think I uncertainty how to ready. spend impact relative fiber operating the for 'XX, to start not a on of off because expenses guidance in side position accelerate probably do for on much to and we ready builds, really seeing to us to that we we're is opportunity the relative will Right so. now, COVID a getting if to but to get have fast CapEx we

So of expense fiber relative from markets, numbers thing the take think hugely didn't number the QX motivated that and Northern I that's be could why we some New start off biggest England be seasonality the the in But the are are I I but think impact get again, to builds. next time. startup away would we this again, for necessarily to of material give not But the guidance, 'XX. at looking a to there

next Our Wells Fargo. with Eric from comes question Luebchow

may your with question. proceed You

in the had growth, you nice wondering out, market. some that of I'm component performance look your broadband as you've

So continue adds? future you with as grow of you tiers you actions you come at growth speed to XX, more your customers from think or can think pricing is do that the take ARPUs or going customer upgrade to do

Yes.

it's both. I Eric, think, that

always able consolidated ARPU as of promotions. to improvement. had markets dollar speed the legacy And a result, couple increment increases We history tier matching an as coming of with up example a a using off have people been

So that's trend natural a been for us.

net as a be of I boost that there's increased, fiber a market New to lowest where the addressable have adds the share. think Northern we the that especially being from comes England, result going

might be product to the the of to sure And give initial would really a got going probably we're what me be to speaking, early generally the that, both. good make a think it's in on aggressive but say, we've too it's going And very and be position. to so I for fiber bit you launch competitive split little I pricing

markets gig in the room where to for launch should stable, we not growing, overall, increase ARPU So the we're product. because X I ARPU there's see think going if

follow-up us on of what guess, take from do competitive a region is what the confidence New of And share the are helpful. incumbents? achievable? rates type homes Northern some that maybe England I environment build. total the penetration what you assuming you That's from that you passed could and kind of what you Great. like think the looks you can And in gives remind

Yes.

way the about think to architecture I the share roughly think there customers, we're but for been net is, base. it network with very hasn't that's a and near exploited consumer the XX% starting X%,

so maybe job some And done of a areas in a good behind we're England. bit of the Northern downtown areas New very more and rural the have in

develop So the a reports environment, in There's going what what's essentially, lower across range situations and business markets to duopoly typical you'd we and see we're something into that. it XX%, possible. works of is other duopoly plan of think our that at XX%, type in

our So consider product the a is gig out gate. potential, when even we of gig symmetrical especially good feel X or going about really the you be X to

way to us to mature. an within available host dedicated bandwidth have or customer have four fiber build the node our all to we in court on out we basis, excellent position the from think years architecture as three these the us puts or technology the the and location, with So duopoly areas penetrations a

Bob Udell back remarks. And like this Instructions] to questions I any further any over to time. the I'm [Operator turn further call would showing for not at now

and Communications plans. to great Well, next growth our results you. and Thank on joining you, progress for thank our the quarter the call Consolidated all look surely reporting today. in forward support and year-end day. Thank appreciate on a have you We your

and Thank call. you, conference This participating. for today's ladies gentlemen. Thank concludes you

may You disconnect. now