Consolidated Communications (CNSL) 26 Feb 212020 Q4 Earnings call transcript

Good morning, my name is Casey and I will be your conference operator today. At this time, I would like to walk everyone to the Consolidated Communications Fourth Quarter Earnings Conference Call. [Operator Instructions]. Thank you. I will now turn the call over to Jennifer Spaude, Senior Vice President of Investor Relations and Corporate Communications. your begin may you conference. Jennifer,

good Thank welcome would to I to you Consolidated call. and everyone earnings Communications like XXXX morning. Fourth Quarter

and Executive full-year as today provide our will for today President our Steve strategic outlook our call will Bob our highlight financial our Financial Officer; operational fourth accelerated and Chief plans. results, Chief comments the on Childers, as and quarter some Bob's On Officer. performance details initiatives, and Steve well are XXXX. and Udell, growth

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

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

includes equivalent. reconciliation Our I'll earnings over release to Bob GAAP measures Udell. a now of call the nearest these to turn the

customer well. brought everyone. carrier and and success the yet talk critical importance services customers. and the Pledge commercial to Quarter provide, support a Communications. maintain good business like welcome you exceed expectations. unforeseen to meet pandemic as to and rapidly to our morning We was year how and were our installed I'd call. very of well very Connected about our XXXX-year services for Keep consumer, as earnings pivotal XXXX Fourth Thanks, And, challenges part Consolidated performed our excited Consolidated and you past Americans the customers we adapting of Jennifer, Communications highlighted and The This upgraded all of year I'm to to

successfully well. increased network levels fiber and handle traffic Our the performed very

customer Partners, announced work. XXX upgraded they a ensure we In and strategic in stay accelerate our partnership an investment expansion. proud year-over-year. resulting which the refinance in our for capital we our infusion structure, their safety, are all in this Searchlight I teams flexibility revenue for Our financial our million capital make investment, it's connections, provides of us million, business strategic XXX stable what Capital time, which a increasing last September am same Well, of broadband EBITDA and our priority fiber and times accomplished customers. of also at XXXX and network capital wherever connected, we who at us total adjusted to with brought make with year. growing in committed and to a immediate the conjunction

We're building have X.X We liquidity and excellent in next passing future. five the will the on million partner of balance for With an and fiber over XXXX. years. we Searchlight, strategic until strong extended our debt maturities over upgrade sheet the XXX platform million

on well fiber a way our are We to first broadband company. becoming

ahead ultimately is more excited our a broadband funded a be increased what fully couldn't provide as strong company grow growth commercial penetration goal We have experience, and return an liquidity. growth. rates, ARPUs and customer plan, we revenue Our consumer sheet, data to and to balance and about increased excellent lies the

growth just strong fourth in how-we-do-business, COV not stable our And grow quarter earnings XXXX, adjusted but ID-XX the improving business, on to and XXXX for trends had year able results material the our the were recent did year. cash certainly and we results. EBITDA demonstrate what a the adjusted challenges the improving execution trends the changed it stability flow. Revenue we produce full The committed are Xth of were free has has for and despite and quarter increased presents. impact that's the very into Our pandemic quarter EBITDA. and and revenue positive Coming we to and

data see Turning very X.X% to commercial track in year. and growing the X.X% of X. revenue record quarter carrier, stream, slide strategic and we fourth We've and as grew transport for a the consistent the you'll on

tower and channel continues carrier our national tower backhaul network sites fiber support to carrier Our to core at partners. XG the upgrades support initiatives upgrades to for

build out net buildings increased we XX% we carrier our As grade year-over-year. capacity,

upsell this carriers ensure new margins increased Our strong to Communications, with commercial to sales, sales Our roughly relationships is maintaining customer make activity to opportunities team which higher greater targeting job of retention. Unified collaborating upgrade on the up net excellent opportunities XX% and Within strong. focus experience demand is closely identify correlates of an to doing ultimately our ability higher customer and remained channel, contributing best sales on

have quarter to offers pleased received UC and our the Award. for recognizing the for valued solution for in communications, XX% outstanding year. grew the revenue Excellence voice XX% ProConnect recently unified UC ProConnect businesses. the Our We're

intelligent our administration, and suite reduces partnership The customers. cost new IP it's using result and to markets which We capabilities adaptive for automation. troubleshooting, productivity all Ciena Microsoft solution, applications to also essential support offers our with expanded a simplifies like scale and IP announced and

The the recent ignite in sales network success. our more the includes win circuits to east educational with CCI locations. remains XX across Our than approach key XXX

X win and deal bandwidth Our gig with us to this dense network additional upgrade fiber locations. add enabled a

quarter CARES adding four XXXX overbuilt first fiber the channel, passing growth. revenue fiber This consumer the five X.X% Xth Support. in will over the our grew fourth we communities, in consecutive passings. revenue X,XXX to communities quarter complete just across broadband XXXX, slide broadband quarter, on In locations builds five completed turning as than with year-over-year across additional shown presentation. we Now of fiber of we represents X Federal more

additional for rural of starting competition. fiber-based with fiber have XX% quarter, penetration clear, evaluating at off we same build subscriptions currently in years. Minnesota. where New and additional the speeds. a proposals fiber Hampshire our rates Multi-Gig northern XX,XXX the in be test a where and we process, We one and nearly just take all also financially. XX,XXX justify work penetration to in significant The continue majority on proximity, Closer is penetration total year enabling two network areas to these we broadband are services. It we will in addition, XXXX, the our are of Illinois significant passings towns built This Because networks and Customers in start. other will fiber have majority upgrade released the we build California, to target since these stage this rural gig England first for are early and passings We be our upgrades of Texas, seeing plan connections were are XX% see fiber, XX% network were New our In accepted partner with are to we're one in larger our we symmetrical. In consistent demand clearly fiber consistent our product with to of we fourth with January, build opportunities. about of York, doesn't, dense fast last just communities than year positioned our rural realized year. passives go-to-market are out. limited locations fiber full XXX,XXX fiber pricing plan. over this for partnership difficult XXX of These overlap. completed to will new representing plans and passings our after seeing These well fiber total New and an with the later cable are to miles X of typically more been We extending benefits at and than is to new strategy build X/X with fiber, bids. more About meticulously sales rates, at our in step has Chesterfield, of optimal areas, leasing planned build bid be building would

a to differentiated customer We experience, offering. will competitive Multi-Gig a offer highly simple create speeds, broadband and stellar pricing all truly service symmetrical plans,

latest We advanced X delivering a using are troubleshooting concentrated on and technology tools. the Wi-Fi experience the best-in-home focus placing possible

done position now will We will us I executed been for channels. XXXX the our and incredible over, our how plans. fourth across turn year they and new expansion team fiber has our the An who work I'm to was our pleased of executing offerings, will on future throughout full resilient quarter Steve, the XXXX fiber go-to-market year. we customer the amount update how well product in details results. plans regularly call on three are you very and financial and more with provide

everyone. morning, Good

to are said, about X-year on I'm was would could As year our build of how to what not like be proud growth accomplished. more I his plan. I excited and fully the very echo positioned and XXXX well pivotal we team Bob comment, funded a execute

happy well as I'm share to as today, details of provide XXXX. for with the results outlook our for fourth you quarter So strong

Our summary of fourth across a the basis customer improved XXX channels. This for presentation. improvement X million, to for on result totaled fourth quarter of the a year slide the of X.X% realized quarter or begins revenue decline our ago. a point our Operating of performance all financial $XXX.X continued compared is

the million strong and XX%. ago. adjusted quarter margins of totaled remained cost from improved upto $X.X EBITDA year revenue ongoing result X.X% a a approximately million and fourth or management, trends As $XXX.X was EBITDA disciplined at

by the declined results. the or revenue fourth in carrier year-over-year. million, represents transport million revenue our of increase from revenue Now the revenue and let's network channels. X.X%, of Commercial X.X% of a XXXX. particularly in quarter fueled $X.X and fourth investment X.X% quarter growth our an X.X% year-over-year. and within of success review continues decline be to improvement performed and million totaled well commercial notable the XXX.X totaled in $XX.X Data and Voice fiber This carrier but

stronger provide for to our SMB continue monitoring channel customers. and be customer our in to group of cultivate increasing relationships this We touch closely point the value

to a data we would of we rate at also to trends. with XXXX at for Looking forward consistent to and voice and grow XXXX X% least expect transport expect perform XXXX,

in our million, emphasizes the $XX.X was year a X.X% data primarily seasonality totaling our the grew consumer X.X% year-over-year of fourth which ARPU due represents Data a totaled consumer In a broadband quarter the channel revenue seventh basis, up services. consumer year to for $XXX.X earnings million, over fourth England. introduced Turning on quarter our quarter in a broadband strategy year-over-year versus leading Notably which a represented the presentation, fourth impacts ARPU, northern highly decline of which to ago. with a metric X.X% ago. quarter consecutive New the $XX.XX, competitive we new increase for

to customers. increase expect We as we ARPU speed grow to and upsell continue data

area. was year in bundled $X.X year. with the XXXX are The compared lower was down in the broadband XX.X%. to revenue see rates quarter, declined streaming for improvement We of was reflects This million of also in in full continue capex. measured prior by improvement trajectory expense reductions contributing represents increases erosion services improved change X.X% significant over-the-top in cut voice the to from offset voice XXXX, half. revenue of to to offerings to Competitive as performance video with decline rate our Video combined consumer revenue programing This $X.X million this strategy services. decline revenue with broadband

We $X.X our approximately new December. partnership the was million, the reflecting for on focus down Subsidy access declined largely partnerships funding revenues $XXX,XXX revenue to and high decline. lower Texas cost anticipated November are to due capex agreements. fund Network special from low access to no pursuing OTT due video

our and the including product and revenue Now $X.X Cost of of and quarter turning SearchLight Net million, SG&A was or due in SearchLight recent acquisition $XXX.X mostly carrier due primarily expenses, in the investment. first services supporting The expenses amortization. England. million costs an X the products change debt, the related transaction $X.X deferred excluding to items higher up the million, and Searchlight million $X.X on in an depreciation sell $X.X due external million, the the in costs in transaction. of non-cash took our amortization $XX.X mix and of Operating the to debt. Interest increase million. to $X.X received XXXX. $XX.X of transport settlements million storm tax cost the expense to X.X% $XXX higher time million increased New our $X.X discount interest of operating interest for October on growth increase in million senior to and the the over commercial million $XX related X.X% note the receipt million and and to cleanup expenses non-recurring expense note data northern were the of increased financing Strategic notes in associated refinancing result quarter, in and totaled property

close of quarter receipt As approvals contingent payment million of in contingent we expect second fourth XXXX. part $XX.X Cash of a stock. occur wireless the common of the fair value total payment related to of valuation $X.X the of up of the in in recognize million the the XXXX. all the to as of million the the and Searchlight This in decline transaction, to with Company's gain we convert quarterly December the from Upon partnerships quarter totaled received will Searchlight completion which distributions right, obligations is $X.X a $XX.X million distributions mid-year, CPR XX. in and $XX.X all million from our fourth

improvement the fourth a our CapEx $X.XX new $XX was $XX.X million support shares rates consistency to Adjusted The the of share of higher approximately decline be projects. with net past XXXX, results to level compared million. including network of X.X common in and share million line For ago. of reflecting we expense. run the expect the our year in per the fiber per in operating expansion reflects issued depreciation $XX spending distributions income a Searchlight was in a start to $X.XX and range the quarter, supporting

million For success network broadband we fiber expansion. based and projects supporting invested the full XXX.X infrastructure year,

of are plans the expansion fiber enabled us global to five-year a investment Our Searchlight our firm Partners fourth strategic refi funded. fully complete quarter. in debt external The Capital

$XXX secured provide X of plans, is rate to notes term X% the LIBOR of on of Our and revolving liquidity secured we cash be. January, coupon ended of X-year X.XX% X.X outlined priced terminal and new of at coupon net our which to million, $XXX due loan consist debt raised a billion at bill of year $XXX facility million floor add-on the $XXX the a five-year We X.X% credit with balance structure million in of proceeds in rate a support currently a with in in XXXX. slide and million plus our will sheet additional

we close. liquidity million I requisite from expect pro Searchlight the When earlier, approximately untapped approvals to $XXX million to as on $XX receive $XXX and our second And the So, have the cash we revolver regulatory mentioned in $XXX stage of of access forma with midyear. we million million. get

remained As business as of changed experienced stable. past we to months, certainly we we nine have not COVID our reflect pandemic. Today, material on the any how result has the that impacts our operate business a

the on continue on areas, outlined several we and is keep year but to pleased cautiously XXXX, to We of close optimistic watch slide am are a our I full provide guidance XX deck. which for

providing For structure. build our current the and XXXX, plan company's we new operating fiber are capital performance, outlook based our on

the but to of our be the associated momentum our to expenses $X range Our plans which outlook from operating distributions reflects of and strong XXXX to adjusted build are fiber with EBITDA in million. entering start the wireless of expected for in cash operating acceleration of investments and down, million partnerships, approximately up $XX $XX normalization $X

XXXX through we range including current interest XXX and the in see Searchlight reduced of opportunistically loan range $X of the as be and be $XXX Cash taxes term the to election markets XXX XXXX. In to XXXX range income are to at is do cost is the our through on $XXX constantly investment of of strength capital capital of have expense success-based We light expect are million. we we market, to capital. the took the result capital a based and taxpayer we of expected we million. grade growth Cash did if can Bob in million. sell and monitoring we we to the structure, $XXX federal in with excited expected to January to million do pivot expected cash As expect business the did EBITDA over a the growth, prem B be and until flexibility upgrades million enter turn plus Again, operating Capital remarks. a from reflecting $X I'll position range back closing of expect fiber proof the funded be I related support to be not financial call over XXXX. the our and fully am in to which with very build level the are $XXX gig future With now XXXX to a that, of to expenditures to million very plan. start strength to spending as we to to includes pleased least XXXX XXX,XXX higher plan, $XXX for

Thanks, Steve.

strategic of talk phase you in next XX. the enter let's see we about transformation, which and our on release as So, growth earnings deck priorities, slide our

our build number fiber Our accelerating grow priority services. to broadband scale and one is

X-year about talked fiber footprint. upgrade on will with multi-gigabit than are more we passings a we our enabling, initiative, million speeds XX% we embarking across investment X.X As where of

Our solid leveraging source fiber second our to services. us a priority and and That's is a grow growth. commercial source carrier for revenue to assets continue of

targeting X% are target business for new And just us customer easier upgrade sales of plus We and to with to We're being growth are do that. it the experience. XXXX those we third, continue transforming and in customers data transport XX% general. going revenue in on to our bandwidth make we'll

very us Our superior industry-leading offering return line this XXXX It striving fiber support digital to a instrumental will and on deliver to promoter improving These growth returning processes growth product best-in-class transformation top with we're exciting. customer and is order to project our for and experience. score. a a is an by intent net be priorities path and put to

fiber momentum now fiber a is positioned to we broadband expansion execute provider. Our build and our we become based stronger are fully on plan funded as and plans

Unit. his how President In as be the of fiber and experience plan I'd to in our to brings Southeast to bringing next our are will expansion plans. our experience opportunity Consumer want announce, to this fiber to time this Google on our reiterate take market we to for Eric have the we're executing joining led Eric our perspective closing, industry Business for week and extensive Small like and Eric thrilled team Now is an I what having excited team. company expansion fiber important be

is about employees. building long-term our value forward path our customers and Our and for sustainability our investors,

We holds. improved a more management I and be financial the strong and position. experienced what business significantly future have stable excited team for couldn't a

So now, time. Casey, will at questions this we take

Cowen. of [Operator you. thank has a come the do Great, line from from have Instructions]. that go We question Williams ahead. Greg through Please

line Your now open. is

thanks question. for my taking Great,

the get to just and profile goals to fiber a of Just, years?. builds Thanks. talk state what penetration deployments the about as Bob, you fiber can home margin in you mature are the your over next the few your

Greg.

me start goals. Let the with penetration

is conservative. what is experiences around plan I 'XXs tell our a our First, X-year can our you mid over plan and built period.

Fiber So, and Distribution to Hub that's first through sale X X for to I'd expect plus at close you us starting, ready the it's where two the point as or If years, from cohort be XX% call look them we a years. in

some is and year has experience to plan our to XX% XX% minutes few get examples, years. ago, excited have a conservative, but as the many to two our get we of in we can able in been, we've in areas where experience So, prior been I some

third-year a be neighborhood after state, distribution. our duopoly So, are new not the opening expectations I the think parity fiber in to or anniversary of long

the comes that So mean mile-fiber. the traditional our now fiber on the of to higher than because maintenance product, margins base, with is that telecom benefits margin the I last

approach of EBITDA fiber margins cases, expect not gross can I many as this think XX% to say transitions and the I higher. I would for business based higher if in XX%, you So, get margins think north you

excited lot this why investment factored we're built a we've plan we brings as that because capital strategy. about it conservative even of so benefits we're into our our that's accelerating And so haven't transition,

thanks. Great,

no Mr. turn are at Instructions]. will [Operator questions Bob this There to Udell. call back the time. further I over

important day. thank to forward year results. is a our you. our us. we thank time first a and great in transition you Casey for us appreciate and This Have Well, exciting look for for on and company and everyone you updating turning very very joining you a quarter

concludes And call. conference this today’s

may disconnect. You now