Consolidated Communications (CNSL) 29 Jul 212021 Q2 Earnings call transcript

I would like to welcome everyone to the Consolidated Communications Second Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. turn of over Communications. Investor to Senior Jennifer like President Vice Relations now the to call Spaude, I'd and Corporate you conference. your may Jennifer, begin

Thank welcome like second morning. XXXX you Consolidated quarter to Communications to call. earnings and good everyone I'd

second are Financial build details the Chief and and the Chief Childers, Bob's progress financial strategic plan. initiatives comments provide today quarter with Udell, Executive On Bob our an President fiber and Steve and Officer will update on investment. today Searchlight Steve our our call Officer. our performance will highlight on

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

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

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

start the plan. completed year build build great is In stable year, we quarter you, the broadband Thank plans. upgrades, a fiber XXX,XXX to had we growth location X.X very our Jennifer. million passings, fiber which And gig good revenue, capable strong delivering aggressive for exceeded We've productive second upgraded morning, have five a highly and everyone. and XX,XXX our quarter

just XXX,XXX in execution fiber to we demonstrates place. months upgrade on proud over The six target With taking achieve our strategy. XXXX. year in that and locations team the team the I'm first has transformation the our is on accomplished and half that our strong of what are first of track

Our presentation. England, slide were six of fiber miles Crews build investor first northern miles on New Texas new plan double California, Minnesota XXXX our second is upgrades markets. recent of in in quarter. constructed the almost in The and is quarter, which outlined the primarily constructed

XXX of fiber high consumer, carrier to customers commercial We cables years meet are the or capacity count larger our placing for to come. needs and

per near Our cost networks fiber very average passing. net for attractive regional allow

Our year XXX This cost to components. which is equipment, per approximately our edge within labor and well includes date, access expectations. fiber passing is

with an to market Our has packages optimized planned pricing competitive meticulously simple experience. strategy go customer and We're highly been offering out.

with compared Our symmetrical will gig offering capable product be a no cable. differentiator data caps to key

and We for time fiber services customers and and days for have productivity. significantly performance within their installing improved are our on appointments, center contact three our we

connections all ensures comes fiber tech Our with best which experience. possible premium support the

in market are all options, it we transformation us digital to do short, will factors easy customers In investments the making give making with they Additionally, want. projects our way our new these launch self-serve business Key great Hampshire local very receptivity new of support a with a differentiated fiber fiber product. customer in highly New a product our is transformed positive to a example experience. recent competitive

strategy easy marketing it choose for making residents local a that offer sponsorships, is Consolidated. Our and a community competitive included to event,

with supply closely forecast. been our We our to vendors have working very understand and to relative partners,

for the already can stages forecast beyond. objectives construction we confidence in have we have from year. we and that optimistic perspective, cautiously sufficient XXXX our to XXXX And the the remainder are our a vendors planning for of with are CP cyber and We meet our achieve build high

second fiber with QX added gig penetration. or nearly exceeding here achieved XXXX the they competition approximately and XXXX double-digit quarter our plan. successes We are build areas early seeing in already are to fiber We and and cable consumer line Early rates, have capable penetration date. subscribers subscribers in

We offering. QX pleased our of are fact, combination in with areas rural and penetration. at receptivity XX% It's less competition In to cohorts with our fiber the very but only were which some speeds, late also comes sales the of differentiated activity fiber symmetrical our services. customer our proposition experience, not truly delivering powerful a to value with new fastest is a that key

is rural track We record increase with that roughly participate community long good year understand state infrastructure cyber we relationships build markets, the good funding alone, partners, have and have America. and for a term. year network and have won allow to partnership the most which broadband sources, mention positioned builds place bids the to totaling commercial us not additional funding an more of XX stages, planning the passings and well have scale our additional to in solid the news. very completed we to five federal opportunities programs. dozens have for experiencing partnerships in in any this public Simply our at meetings private to in XXXX support channel, put, face we're expand Within are to municipal with face and This

are quote to concerns. still However, from close COVID-XX time to sales lingering cycles due seems extended

to based go on which leveraging our commercial solutions, application strategy fiber data Ethernet grow to and provide market revenue. is Our network

based over to and on trusted first in solutions we to year simple customers focused to work it's advisor from utilize quarter. Our X.X% which problems. CCI roughly revenue sales our we year, teams growth transport We approach, and provide X% and and the call solutions up grew are sales network Ignite. complex a become always a Data

with Unified SD pleased are are and which our of We solutions. leading around Ethernet, and sales teams activity WAN, momentum the the Communications sales

or grade XX% the year represents had XXX strategic XXXX [on build net] nearly roughly increase capacity, carrier quarter, builds for we over we commercial. XX% that by on revenue in We of revenue year. buildings our out and As roughly

strong sheet channel needed business us return, the Our focus. support this grow enables highest the with commit balance and to capital and to the projects

on XXX and This highly quarter market our and we us up in the well also to network, logos. in new move recent continue engaged. to selling [ONE Agent] is provides Partner help bring Our agents XXX channel performed -

the across is we carriers. carrier weighted in interest all seeing team XG carrier wave product engaged Our are more and commercial carrier opportunities major solutions. actively is Ethernet toward grade like network The emerging mix with

Our network we contracts in increasingly an and growth opportunities, carrier team of proactive nimble and generation sales the landscape. pursuing compression as second has pressures manage experienced, price on competitive

call We and will Steve for business turn with our continue be provide to I'll about who Steve? financial receptiveness more over now second insight resolving pleased optimistic and the to recovery meetings the results. are on projects. quarter

remind in made the morning, quarter will another strategy. our was XXXX good transformational It our And quarter team great for first build you I our an fiber update reiterate sheet. results, Bob. balance progress you, of on guidance exciting our provide Today everyone. year strength as Thank we full and second

our offset costs the fiber investments products. cash increase to X.X% and Our build $XXX.X second the startup just in be million factors support for our down is revenue year rollout EBITDA functions quarter line starting to included of increased plan. marketing $X plus in was sales which can which also ago. into quarter support wireless on new The largely highlights the in four by a found with was distribution, million, which fiber quarter was Adjusted guidance Operating a the million presentation. slide the compared gig one with the of $XXX.X

revenue million points Internet quarter, recorded total or and a as continues ProConnect. Internet Now bandwidth services, lines was commercial customers $XXX.X looking the and dedicated by up in revenue, migration be commercial two led Data driven customers down which X.X%, of the our adding approximately $X X.X%. by solution was VoIP million to as carrier million and declined closer our solutions, transport second data. in $XX.X second X.X% revenue reduction VoIP Growth in - $X.X revenue access well the to million, at and or Voice quarter.

basis which channel, X.X%. decline Turning was up consumer Consumer was to of X.X% in few the more also on broadband year broadband realized consumer reflects past million, years. our have year two a highest the over over growth represents that revenue growth over rate year over year year revenue. million, total consecutive years of It $XX we year revenue and represents than a $XXX

growth margin. Consumer the ARPU our combines video data approximately new The sunset, basis, voice pace this revenue plan customers a and Consumer rate was ago. partnerships. to negative transition our was $X.XX million. we has ARPU year year up Video from services in fiber and revenue down or both X.X activity. execution X.X% we on down of or has and slightly linear this as streaming X% was are our a video copper driving our to targeted increased by driven in-demand increase declines revenue upgrades laser-focused on speed product data million, $X.X While of $XX.XX, the a quarter is through build fiber second standalone

offset rates mandated a meet strategy approximately manage end video Service totaled decline rising fund by in driven to state our cash allows from current down increase needs in reduction customers’ The due Access gross top costs revenues were $XX.X the CapEx. over XXX,XXX to funding improves to revenue Access quarter. in from Our cost declines the flow. fund. revenue up by Texas Universal Special partner and million, free year margin actually a and during ago. higher revenue, users any slightly Subsidy Network the or high us linear content was

in Texas an telephone filed [indiscernible] appeal to effort restore an prior of funding part ruling Association by on levels. are We been recent which to their the has

$X.X turning operating of products or of increased the two amortization, Now expenses, up factors. $XXX.X to services second $XX million, million X.X% XXXX. depreciation due Cost and from exclusively were to quarter and primarily million, with

$X.X of fees the rates result quarter. increased as First, end Service in Universal second user million, a higher

these expense fees through are and EBITDA. neutral reminder, a As passed to are

to products. one from increased $XX interest primarily $.X date. was million to for to year expense treated marketing million ago. where the SG&A - completed adjusted or as upgraded million quarter targeting And we customers rolled and more charge fiber EBITDA. to due mentioned, add gig here passings an increase million $X.X increase back recognize assets new X.X% one-time out the XXX,XXX we in in have quarter cost relating Bob we Second which as or have a an an million, upgrades a first Net than expense $XX.X we our of $X.X

to completed reduced extend seven. us with and sheet capitalized Searchlight balance The the October, increase displayed which new slide liquidity our As reflects we leverage. the maturities, on and global increased allowed refinancing last investment

For the increase is note expense totaled million. to remaining Searchlight related financing XXXX. to in interest compared due senior amortization, deferred the combined quarter, mix as $XX.X costs of and non-cash primarily the discount notes the The with interest on higher

reminder million loan, reduced offering bond approximately balance our a repricing term repricing $XX in $XXX early by the certified over the a second of have As this The cash year. At further $XXX we annualized our second liquidity of strengthening approval expect sheet. stage cost end the million and a our receive the combined of $XX FCC April, completed million. with interest we we receive once from in million we quarter, to later the transaction

Our liquidity new XXth, the presentation contingent Slide with to Searchlight we recognize payment of a strong increase funded return right our the of fair the capital related loss to eight position provides growth. plan At in million a Searchlight. to value outlines June steps $XX.X of investment non-cash structure our build us of partnership. and fully the to

received related support investment. from who we all under in overwhelming and approval We the Act, proposals approved received have Hart-Scott-Rodino the April to shareholders

CPR for to the XX, we required all the to July on conversion subsequent issued of the necessary the regulatory second TVC end received of quarter approvals Additionally, Searchlight.

approval. which stage light by impacted review change will year million processes which second have FCC the end. investment, administration expected $XX and of approval is the The in following FCC occur for telecom and The timeline of is

totaled and reflecting or X% the upon second of the issue million million XX% aware in a challenge the wireless of Searchlights petition. as half perpetual will and a substantive Cash estimated convertible company's However, CPR the performed of XXX investment are for digital conversion $XX.X is for an coupon. or will our our to CapEx will million quarter second to closing stock the and first first note interest totaled the million of The XXXX. result Searchlight second first million over expansion preferred $XX date state equity full full half our network half common of just year. the quarter and holding to the $XX.X we technology. of $XXX.X distributions are partnerships in $XXX in expenditures convert $XXX XX% retain from of end with the supporting transformation no with the and year the Capital million fiber Searchlights approximately compared of shares XXXX, stock

range our five services, service start. for $XXX million. and of success interest build guidance plus broadband plan the our the to by on outlined capable fiber to $XXX offering $XXX is to a to in enabling are fully increased plan great range million. XX% Our with $XXX be competitive of range Adjusted related be of is $XXX the expenditures off to capital highly This slide expected to driven Cash year to least fiber our to to is fiber expansion XXXX, previous in levels, our $XXX of be million growth services plan. guidance funded expense is gig Today upgrade which the million. expected base reflects investment EBITDA at in is CapEx million area nine, expected

in XXXX. be Cash I'll remarks. investment the Bob at over of it through taxes for back XXXX pick million. the $X With to and expected to through million do range are option have closing to least expect to so $X income his turn that, now We Searchlight to the

with an is as making Consolidated path are scale. Thanks, plan, deliver experience be a with year investments growth our improved with fiber the new trajectory build capabilities. team's on a year developing very for product Steve. track we are ability today The differentiated to confident and aggressive we I of with and and excellent superior Well, in the to in forward very on in continue I targets machine our fiber confident a plan. it's fiber I'm Communications. five construction upgrade Furthermore, to ability am we early the am exceed growth first our creating pleased very to customer digital

results. a have first clear on our execute plan and expertise for to We growth year demonstrated as of strategy the by the the half

to line have is an strong. on closing, on we consolidated support experienced top balance the In XXXX. a working I growth total team plan. partner from this company to We're our in Our hard bold thank return want sheet path in strategic deliver who's And to Searchlight.

long path what Adam, excited questions. more now employees. be our Our for forward Thanks. about our and investors, value is building sustainability couldn't we'll holds. and our customers term all future I take for our

line Instructions] with from question Greg Cowen. your Williams comes [Operator first And of the

I have three for if questions. Great, thanks my taking questions I may.

where shaking is on is gas you do higher one the trends. see wireless distribution, end million first like The the than little in sounds that coming a $XX.X expected after and And you million down that I for the year? the of in comes around just seeing guided assume $XX it and the XX million as still second year to half, typically if holds.

don't there response fiber you some then to conduits. question some levels, scrutiny? doing response creeping footprint? quarter, in is that plans And Bob, the that builds, any is on and up inflation. anything in and your are and maybe Second mentioned inflation question deployment Thanks. you orders bottlenecks for resin you good But side, Are mentioned what's was think to you cables the caused go. your on now, cable just you're XXXX I last seeing your a the ready fiber penetration fact, bottlenecks their more see bit in for last mentioned, to

Steve, I'll Thanks, two? want the with the Greg. you wireless [distro] pick then to other start Hey, And

Yes, sure. question. Greg, question I on the appreciate the wireless.

would So we'd be thought half we year. for XX you're be range a have first yes, are previously, of we for said we of to right, we to ahead the always where your running exactly And XX, in year. the point, of full

hit would we XX. if would so internal And models, our what's at be we in

at numbers Verizon, there. - we as optimistic of as QX, of million cash have will But don't so for assumes don't, Pike the of to XXXX. the we're, the distributions we're numbers But remind And and you talking to the little them will that million checkbook and, partner, Q of of limited year. our QX. about. coming we have hit have – going necessarily wish rest here we've again, the the visibility in And that bit $XX don't we we best good So I that $XX we a end control I you, of from up the a for we down rest that remind we're cautiously cautious lot what's putting for exceed kind that we're been did internal the

miscellaneous Yes. of the bottlenecks. terminal see in perspective. second or construction and question, start to With We're from side. inflation, stage, At really regards the equipment of part delivery XXXX And fiber we don't bottlenecks about your pretty this seeing improved dates. on any commit actually the we feel on even a good

On we're the perspective. little to chip X. Wi-Fi X CPU in trying this industry side, transition all more We're Wi-Fi the cautious a make from a from

that seeing for some work infrastructure with have delivery, so even options. product that delivery, is we vendors digital to bit closer our that little and us those with And a create additional causing slip integrate service

have good a the we're Wi-Fi Wi-Fi cautious flexibility or [inventory] got the Wi-Fi access we've being inventory So to X on with we on little to X. move X. bit But

term far an haven't We've seen installation got perspective. some some fall. as contracts. long made last anything from commitments volume We As pricing,

it's is And so markets, least pretty the so in markets our, still, natural perspective. from deploying hedge some cable perspective. more get your think reliability cable in I product. couple of to next in years fairly we're speed and hard from with shape We're upgrades we've respect gig good what that how it fiber our responds for in plant experience an like with to service response with. we with ton attention. build, us - by suburban I of feel the symmetrical that really a And that at can The don't we to We simple a it's of to to - feel And, match we're have anyone deployed for the some cable ordered. compete seeing we natural one a markets. product, confident installation don't But pattern think ourselves being rural very and it we're compared of so distant and small

So I feel our about good product.

you. Thank Okay.

your question Luebchow from up next Wells And comes with line Fargo. Eric

questions. taking Great. Thanks for the

me. Just two for

get build, you the curious more mostly far, XXXX. maybe as that Consolidated? secondly, may the can where or process sales you gross from activity? a So And growth company upgrading the net level obviously, aspiration your total DSL to customers first, on the Or node about top good easier? line I'm coming fiber by they new be of from so fiber penetration might are seeing to be existing talk customers the little to early Are then to

I think about business products we and consumer maybe what you. declines there, could legacy the you carrier about of segment, some point, that the and you can SD broadband somebody the growth talked get our at arms voice? do you think around Ethernet, WAN commercial the areas, like offset can opportunity talk Thank

Great, thanks the for question.

think transition, a first why now from perspective. planning, the Let the we're that's on competitive our we we're, as me fiber passing probably on in we've process areas the shortening. growing, that about and made has loop from really with, obviously start new of are cable I XX% builds, And, executing a outpaced ads. it. where, And side on year activity that ago the upgrading, some DSL, We're the have, being activity started and is where benefiting hitting because

So feel good it's quarters higher new we that. XX%, And the XX%, going ads, from as about progress. gross to

that we're growth, continue able data I line benefit top we do go is we would because fiber continues tell and carrier and that the strong copper of with they the extend growth, Ethernet and range necessarily month network a industry, have and commercial the consistent that been for that, as a solution. not versus that product across a we've customers, from to transport $XXX almost bundle of to you, terms In to doing pretty for dedicated a all product, higher, as soon between

that And so, us consistent have high to allowed so that's reliability in growth and bucket.

fiber in which FTTP Steve, a feel voice on we planning, those deploying lines all look based And offset be to perspective, fiber, we're from a growing position a decline do our regions see we broadband with so growth revenue that curve. anything in when crossed pretty from add? the at we'll confident to good and

agree of is I with calculus on everybody FTT guess, call. and I that that and Part well, growth you focused to else carrier. everything everything Yes, the about you said and plan, what we're obviously said, the return on to Eric, commercial the going very reminder and very saying the we're excited to

the the that I on you we consistent think So best in or just few on area, is I growth demonstrated of we've the on reset think, from have I models in teams that do have the we're, number the would their I CAF And But class funding we're then XX, remind off into side. enterprise commercial putting we one XXXX. consideration into has so II in X that now. that right built everybody top January start taken think for of line growth being

to planning start consistency and you'll carrier the think growth do sequential seeing teams. I XXXX some in the commercial on

Okay, thanks question. for the taking

your from Ana line the with And Goshko question America. Bank of comes next of

Hi, thanks very much.

promotional the Or to on the just the superiority so being comment, And in with product? it fibre on are growth competitive the actually that well? you To to cable? is ads as are question - on getting and you're from clarify, so, what wins the up of follow if the basis, prior those the home. So

And, cycling through things, marketing programs that we're spend, aggressive marketing. work. demonstrated and as with absolutely [popping] being We're trying by in our quickly new

the And We on, the interest, will, of tightly like a some where in set do in. direct then direct you market start a sales do then wins we cable, soliciting so PR, comes they're mail, kind up local they're construction, air with and for have if managed would website, very I attack, market. of our we competitive softening with activity from say based duopoly a, and the

produces of that onboarding. and low sales, onboarding is cost, us And word really and helping electronic the marketing customer and in in really drive itself so sales. as equation both spreads is And which as mouth, direct well

to coming well. really works an quite air that in door And of with is door equation so and attack that ground that troops kind

was pricing. I'm Okay, how being aggressive to and promotional promotional? just you I are then referring

sorry. I'm

Yes. Pricing.

commercial, with you tell would lean customer. on really I our Yes. on we the relationship

take we them. on broadband it's whether the [LAN] for customer's and or focus them. solution. from it DDoS, allows have a use first so a providing allows that new a building then And doing perspective, interesting technology us secure, them on to input our the, us And cloud problem And blocks with to we product the the for to what they're solve

And so high we're fiber, and competitive definitely price, on has the reliability.

so maintenance customer with, after its like, solve price, isn't allows assess think And understand but equation for aggressive high. to us to I our competition. competitive the we're the wouldn't how installed that looks And competitive, behind what it under of pricing I definitely - the we're broadband work a with use we them quickly their say with problem

parts Okay. the follow a of topic and And prices thanks. post-pandemic on then and impacts potentially had up either we're a operations? some to rollout just your seeing or positions company Okay, could And your on be and hindrance of secondly, that adequate pricing of other the the have unfilled then, labor now labor market, in other the or of kind inflation you

iterate plan. to sufficient that to. we continue meet have resources to We might we other areas And expand our on

any the see us other than worse labor don't we inflation or in can't hurting economy But, now. right labor, challenge we us. around competitor. world the So any inflation see I watch or challenges

around areas. employees opportunity excitement the of in to their better employees And we because And culture. our renew a we've and In and fact, new retention provided, is bringing for have a think that culture, had I outstanding. of rural suburban a serve we communities we're our wonderful to service tenure sticky positioned,

there's lot energy So right company of the a in now.

for good become have might that We candidates of a positions open. lot

foreseeable that's for looking good any I in we're the see always But us labor shortage people. so don't impacting And and future.

so And pipeline for them. have far, a good I

are then plate other kind country, And like markets final are there got point? acquisitions thanks. available now. But, you've looks Okay, on right you at this open it question. potentially or of any a around tuck-ins, M&A local your or to know I lot the

good value focused up organic we're the saying executing got chase we've that's M&A across Searchlight, a see to in my never their there's I'm fortunate come they're of partners on great that, that as radar. evaluate then additional specifically, And really But plan trying them really [Andrew on opportunities. build, you and Freys] have opportunities tell would front a to, And, our partner some our there, we really ever, price as lead to assessing more us but think at allows in now. and activity. so I those contact in that us

never never. so Okay, say

Okay, thank you.

there the [Operator to further Udell. to time. no at turn over like Instructions] this questions Mr. And back are call Bob I would

tuning joining appreciate Adam. look a And you, thank the our all on for call you to quarter We results. Thank today. third and Have you in day. forward you updating great

call. conference today's concludes This

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