WideOpenWest (WOW) 11 May 182018 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the WOW First Quarter 2018 Earnings Call.

As a reminder, I want to advise everyone that this call is being recorded. At this time, I would like to turn the call over to Mr. Lucas Binder, WOW!'s Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Binder.

Officer, morning, XXXX thank today operating Earnings Elder, results. Chief Good our for is activities; Virgil. giving will WOW’s Quarter be cover WOW!'s First Call. Executive Officer, and you, Rich everyone, on Chief you and joining Teresa an Fish, Thank update will Financial our who who With financial me the

may our and known our results, uncertainties statements. expected need These call, federal started, in results, operating to We we we unknown in to forward-looking to harbor securities remind financial safe update statements that position relating some to subject get obligation or of statements. on forward-looking reliance strategy forward-looking about will we are implied forward-looking business materially the disclaim during operating expressed be laws or our our any made those matters cause to and different performance our making from Before everyone the actual factors and that be provisions risks, and statements other are business. other such our

to section additional filings including filed factors that could refer cause actual the affect with For with of Factors results our to SEC. information Form the materially, the please financial Risk results SEC, differ our concerning or our XX-K

adjusted residential adjusted to and capital dispositions; please acquisitions and addition, and including financial non-GAAP certain EBITDA; measures. Business EBITDA; EPS. refer revenue, our note including Services transaction-adjusted transaction-adjusted Such and we acquisitions dispositions; In that include: revenue, release, in in today's including and dispositions; expenditures; earnings subscription measures revenue, acquisitions call subscription

information information GAAP is or in measures the to financial considered reconciled comparable These not for financial substitute investors, most presented information isolation of the While presentation in accordance believes to GAAP. company non-GAAP measures. the are non-GAAP a the with earnings in will measures be our for intended release this as provide these useful

Teresa. to over the turn Now I'll call

Thanks, and call. thank Lucas, joining for today's you, everyone,

me to our on we by demonstrate track we're and starting some start see indicators saying that with Let trends. are leading business transformation, improving

in I of are months additions. While highlights our the to will future. our engaged, encouraged RGU results and quarter, the would are first Rich we first of our the quarter, first growth. results, we a some around vision our like RGU specifics net some which start change, total and X,XXX believe for these was of provide XX review of quarterly RGUs, I'll HSD and employees were HSD net midst which with are in the lot first positive. additions quarter Included outlook. March added in includes X,XXX In in in time organic the

quarter quarter first first total was well. first lowest at added the Additionally, churn as on in level quarter the the our records. X,XXX customers We for

Now executing we're is of the to this toward vision and strategic growth, a operating start our still an early year. way in and the to excellence phases return encouraging

ability XXXX. passed our ramping Edge-Out For XX,XXX Edge-Out ability of Edge-Ins, including our added to this of approaching We and Between is represent the trend the footprint, even we Edge-Ins, efforts we add return including extend nearing penetration well grew our would growth exceed potential. which the within the XXXX. XXXX, Edge-Out passed quarter to homes subscription ended potential Edge-Outs. acquisitions in our XX% existing the dispositions, March Edge-Outs up by expect encouraged Nodes which our remain network Edge-Out in Nodes in XX, greater XX% grow the Services The homes and and continue XX.X%, XXXX continuing our through our Among unique to growth revenue, quarter, of are are penetration, and XXXX segment. first and Business as double-digit opportunities

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our Our the in vision. quarter that reaffirms confidence performance first in

our rate results beginning phase, April. a implemented in renovation the that quarter second at and still XXXX annual increase our are will of reminder, was our include we the As and typical impacts seasonality from

subscriber As our expected, growth these in affect the will second quarter.

strategic quarter, customer million between and our our mentioned people. and and also initiatives products retention, We investing in million last customer $XX we're and and experience, $XX acquisition services

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the are our of reigniting and We energy passion people.

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watch $XX are to of the free positive number first There be cash For to leading customers. continue million expected this indicators of and our At of and progress our $XX towards expect cash people are year, indicators that the to trends. vision, of is the flow. these showing ensure between to list we and positive execution million. full are top we see year a Free our

Scores, Promoter since beginning is WOW!, year. how which Net measures others to the an employee work the to refer employee Our has likely for improved of

these growth trending We closely field market, watch as that is Ohio scores all feel A just Columbus, Top teams absolutely great confident example care Magazine, our for in was to And the the are positive growth. that repurchase is has of Board and by that each our initiatives our a long-term effect, Directors first a challenge EBITDA of people, challenge are We're ultimately which return satisfaction and will about and win execute customers upward. within they program. of by working XXXX. in vision. award authorized an since CEO metrics of ability -- Additionally, customer to named a our consistent our of our how new customer million to on that's and reach. result Achieving here WOW!'s stock exciting Workplace investors employees indicators across $XX the these subscriber

to in business, with have we the addition, further plans of found our Partners have the at the ways exceptional million to an WOW!, I customer Crestview ability in energized show experiences. by I'm many conjunction and WOW! In additional employees people truly be the purchase continue to stock the customers. $XX of company. a inspired confidence I believe great by to deliver passion wow and our as

we've our EBITDA aligned, sharpened focus and are which consistent key Our positive teams on return will a growth result in growth. subscriber to and priorities,

it update outlook an XXXX Rich? on turn our XXXX. I'll to provide Rich over our Now and review first results to quarter for

Thanks, Teresa.

in of with have a company's the these recognition FASB's This quarter, administrative affected adjustments was we new adjusted in which year-over-year prospectively XX-Q, revenue been of a Accordingly, the of both items Let X revenue adopted morning. Starting resulted the January comparisons revenues on couple me which of start standard. of of as standards. by in this year, first. and detailed the this earlier number impacted filed and EBITDA adoption expenses, our certain components small

methodology. we accumulated quarter procedures. network and first single Difficulty] reporting metrics standardized was the [Technical customer Previously, into through independent the of reporting XXXX, this data processes a during and and maintained of The separately Additionally, statistical

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couple with start items. Let's a of administrative

small was certain of the the XX-Q, new which revenue this standards. both the Accordingly, adopted in our a and in Specifically, and this morning. adjusted in at the affected FASB's year, detailed by to of Xst impacted this number and recognition, been filed comparisons expenses, has earlier company's which the of adjustments revenue components EBITDA adoption prospectively of we these resulted revenue year-over-year starting quarter, as

video the our first references, HSD, the activity to those our herein through RGU changes resulted Additionally, to and XXXX, subscribers, standardization The exclude methodology. statistical the during in changes of impact quarter customers for single customer accumulated total of procedures. during XX-Q. to definition Form accounts earnings quarter, are refer reporting quarter actual detailed and Previously, the will separately reporting and modest data subscriber our solely standardized which of of to processes independent we release net consumer metrics activity quarter. telephony a the the and maintained in of the impact was network and and however, All this both and first

a share million, net to I'll of and So per of March for and XXXX. first Net turn million. per now XX, $XXX.X the XXXX, for million reported loss $XX.X the diluted was of totaled $XXX.X loss earnings ended quarter per revenue share. total EBITDA adjusted per $X.XX results quarter $X.XX We adjusted share share, the of

we're have represents year. new we've increased they RGUs, XXXX of of started organic for Edge-Out subscriber which quarter. best years have in this As that positive continue extended we the trends in Business to subscriber XXX X,XXX, added At first approaching subscriber XXXX XXX trends encouraged been March homes. during strong RGU category. average homes which total momentum included XXX,XXX metrics last almost the pass for subscribers, we X Teresa the continued total improved performance metrics were on first in its these as organic during quarter, in the in particular recent XX,XXX highlighted, market, by of total X,XXX $X our Nodes The for quarter HSD quarters days that where the the subscriber significantly combined revenue, in also growth in Total initiatives HSD now Nodes as RGU or penetration total great positive the dispositions, most this experienced amount, of we during an in XXXX, are XX, last XX% average first acquisitions days, the for of we've we've X,XXX very the and performance market Having the communities. These the penetration first ramp from totaled best in pass Adjusting rate achieved X,XXX passed quarter that finally, confident were the the the best effect XXXX, of subscriber XX.X% transactions, that X in XX,XXX result of our of including to $X.X a Edge-Out Of subscriber The the with and Edge-Outs, approaching identify performance last total the growth, Those penetration. a subscription in by X Services achieving quarter RGUs Edge-Out revenue or we're have we of And homes XX%. over them but last continued a a organic increased execute effectively. the restarted in quarter network and represents million of total year-over-year only XX.X%. million years. increasingly years. is least now million RGUs also subscription change the first quarter XX,XXX experienced net a XXXX, subscribers and by we're Services of on our we homes. added at the Business target total at and to subscribers for also pleased communities performance quarter. opportunities total increase now which for not derived our say, those ability XX% to Needless in very the $XX.X and historical

to add elements first combining XXXX expect in homes the that network the in to $XX.X Edge-Outs reimbursed project, will Chicago from million. completed. are XX,XXX for new fiber the quarter continue Of invest as from passed buildout capital XX,XXX be final XX,XXX Edge-In of which opportunities. mentioned, we we As amount, of approximately to was the million completion incurred the Edge-Outs, XXXX, the with will expenditures Total where our toward of was $X.X Teresa

transaction-adjusted We million, year. effect our track dispositions, the it totaling totaled to Adjusting of capital the complete included will on time that which transaction-adjusted for next for quarter first be build acquisitions $XX.X network efforts $XX.X and strategic are complete expect expenditures some of capital first million. during with and half the the

capital impairment assets an totaling those expenditures the revenue. the of or first From capital million quarter transaction-adjusted recorded million first XXXX of we XX.X% $XXX.X Excluding strategic $XX.X a noncash investments, standpoint, total quarter. related totaled during accounting intangible to charge

during at stock behind price quarter. the of of the the the was driver year, our end charge last the the As primary case was market impairment

to price believe the sheet. intangible is balance one we of of fair the of Although inputs the data stock point of is significantly value the on our market undervalued, that estimation the assets

is vision noncash initiatives our Although business, confidence year a company intangibles impact or customers, return and our accounting on employees, ability the about unfortunate, the to impairment event our the of to hand our for our execute no our to absolutely the has our on $XX.X a Accordingly, total March growth profile. trailing EBITDA At we With leverage. debt in was cash to and $X.XXX a and outstanding XXXX, end regard quarter, million the XX-month of at had XX, liquidity of on basis. transaction-adjusted billion. on the X.Xx leverage

interest to initial to the into the we swap the company cash of In million its the the access balances, interest an our to expected The addition, debt beginning approximately subsequent first of rates. quarter, our principal rate balance year covering and floating significant for mitigate cash entered of of rising has risk liquidity through for outstanding amount agreements rate XX% flow free our available revolver. $XXX

have cash last $XXX million available and of position. of end addition, still the We authorized the to federal expect least In the of XXXX. fiscal very a at buyback don't a be totaling $XX the stock year, million taxpayer Board NOLs income as we has a a reminder, December common of program. tax until company year, favorable last In as approximately Directors significant

program. buyback the the and in end of the over market X had completed company had open authorized March XXXX, shares As the XX, million purchased of

repurchase stock while stock. Directors time repurchased plan value required $XX repurchase As company of in modified months securities to attractive of and transactions the objective negotiated mentioned, capitalizing means, an shares expected and number or over will suspended, next the Shares federal no be may in to be Teresa other There's it at prevailing be valuations. repurchase, delivering on by at common or market a has the time. time discontinued prices program is with program any repurchase the This market of the is which company aggregate to market open that from to the to its laws, shareholders million privately XXbX-X of enable authorized announced programs. Rule XX the Board of transactions including minimum that immediately, may outstanding repurchase new executed commencing with accordance

In Crestview company to company. that the the growth in trend with to funds fourth And year, had Partners Teresa an the addition, provided quarter sequential Accordingly, each with -- to XXXX. of million conjunction common sequential the we the year. the increases year-over-year Teresa by stock L.P. additional that specifically XXXX. mentioned, up $XX insight and GP, purchase on of how our in outstanding throughout expect the informed full they address expect as affiliated year finally, for quarter the to of in plan adjusted we XXXX in for outlook III how reiterate as from EBITDA culminating EBITDA we guidance positive remainder some

remarks, So to call back to that operator it I'll concludes questions. prepared turn and the to the open the

Levi [Operator from Instructions] comes Bank] Investment Your first question [UBS Batya

year, upside talk had it bit. that maybe a forward? increasing plan down. you looks for targets about to cost. full like Can another talk the in little will the we of quarter? you saw sub for increases any growth impact improvement high-speed versus you data core how saw video subscribers? second data Is we to cost a the that going video programming expect I can our And difference year, the quite market high-speed there balance that impact been is given year? of coming And the the start bit question -- the hurt strong And that drivers Last ad it's into the It about more on Can we you on price data this then quarter. to mentioned

question. that. Thank much so you appreciate I for the

the would overall growth, growth say. number I components. primary there's think the of drivers a So and all, And subscriber high-speed first believe, I question, I data of was around first of really

all, people of care done got have about people both of of as right the the adding things. jobs; to First customer in as Last ‘ we quarter, we've people the we in right organization and those right talked salespeople, number -- jobs. key care secondly, our well

and us across memory it I that's easy, the think down the that surprising, getting that doing are, on to alignment thing customers. being many that board then third resolve focus key muscle The And precisely what and wow helping finally, is helping gets to an priorities and on really reliable, is how of have fronts. our we REPS, back pleasantly our execute

those and are been. agile starting encouraged helping board though subscriber on focus that on the is initial by growth first clearly, organic question of of us across is place it April was remains and to from taking HSD, are guidance Even on really has X results the I rate increase the had things All a second quarter rate and full growth, you increase around the both especially believe as that question variety the our we your if across products. our the year, about growth.

any adjusting think increases about And cost cost talked And trying not on finally, we're you that. that. in increase I and subscribers with our that we're video as changes reflective those to of rate then offset or associated So is financials well. programming virtually taking

Great.

high-speed change of Are Can -- video side. talk I the Just competition? you a more data bit following have competitive on in the back a environment? been you that little bit finding difficulty seeing on believe on they the raising prices any the growth.

the that penetration the would encouraged some is a numbers is most And things our we've last to in us, the churn, the that that I of never are one whether yes, competitive X highest increased has What in in guess, with I'm X happened way. historic years. X on lowest competition. years Well, the by busy over in these very growth is speak broadband I product of record-keeping, for competitive. our landscape our for it's But seen subs

best we I XXX Gig, the just nearly strategy think HSD always MB reflective our in our to products provide products -- believe value of that's our pricing are customers. value some is such that that X excellent XXX Gig X our is of and MB we And marketplace. that network and the completed,

from the comes of Yong Amy Research] [Macquarie question next line Your

Just you Maybe of question to quarter saw us competition. in this I up on, talk following broadband. on guess, what terms Batya's if could about you

then Does really the high out room penetration Gig very impact be could broadband mentioned talk just to of the And about is guidance is housekeeping. there churn, us And now. maybe product. point X the You product would of obviously you take rates that and into that to Edge-Ins? that you include much if the if upsell the maybe parse and helpful. for But a Edge-Outs could how versus

Okay. Thanks, Amy.

take The of What all, we we yes, the are customers First the that the we're our love higher side, higher across and have speed competition. some markets, is board higher on needing broadband going the competitive speed. seeing for are and up. rate

are the and at of broadband. for their that look the they IoT devices applications in across are As homes many there number board,

So yes, rate to take we see those for fees increasing evolve. continuing in speed higher our the

Edge-Outs about over the and Rich. issue Edge-Ins, turn to On the I'll that

guidance does Yes. Edge-Ins. as well short answer Amy, organic that and is our the Edge-Outs just as combined of impact both include the

Your Louthan James] next [Raymond question from comes Frank

the that the And surcharges to or actual an adding product? that the clarify, video is the positioning video of the Or product price increase increases? you itself? Just -- price are across or on that? like Is on recovery how that for the something retrans all that just you products? on Are is increases, with

just product, rate recovering increase retransmission. our The is our -- more across cost Yes. really it than and is video on just

Okay, you for he's great. on maybe Matt question this. then And or address a if can

bring can what some an Charter help can think top spearheaded out? priorities that guys some the from or implement possibly perspective IT of projects that the are at and you that you you of were So you

Matt's ahead join future Perhaps us on he'll Yes. answer go a and on behalf. I'll call.

And transformation. talked one key this in which job into with, about the ahead includes first He our right quarter, initiatives now, charged the organization answer go so as the like is of XX IT for about really is days he's and think I we year digital I'll our course, of technology, well. really his of him. all

from So customers, that's help that everything wowway.com, also a care us way our us tools they can customers initiatives our better to. where of number access to to in mobile our any so to app, want really our provide

things to help better are as are those employees that going So our serve our customers well.

variety on us So part. things the that with of helping IT he's we whole a have

Instructions] next Philip question [Operator Your comes from Lamb.

So to more quarter about I flow for want generation this going and understand cash free forward. positive

the So I CapEx would guidance how strategy growth expect for remember Edge-Outs. on and down from Edge-Outs? you reduce slow your also your Edge-Outs to from your year, going But to that and impact your RGU forward

we enable of Sure. the The part is capital investment free $XX have our Edge-Out guidance Included Edge-Outs $XX company new out is related between cash would as a initiatives. that flow build homes XX,XXX to for that and year XXXX to in the passed million. that million

within our Edge-Out Network In our exerts about to. those of extends the footprint that call, the call additional homes existing marketed existing those to exist initiatives, we Service XX,XXX footprint. addition, [indiscernible] Edge-Ins passed at that we we've network. been as the already however, clean of an least not -- inside XX,XXX to our on spoke passed. have off previous capability capability identified existing homes representing And the

homes to the to in those passed. added believe the I combined homes was passed XX,XXX add XX,XXX in new were than a actually, X what which on basis, opportunities, new So new were more passed approximately XX,XXX company that XXXX, we homes or expect between

normalized that CapEx evolve level can basis. as plans provide was, on our is a CapEx and going CapEx question CapEx of you Edge-Out we Edge-Outs are without a forward? we The can you a normalized continue number it based provide expect or you Can what our on go-forward with to will level identify

providing don't we subs. what think be provided any for I going CapEx So for we're guidance XXXX on beyond for forward-looking to

questions over You I further turn the presenters. have no call to at will back this time. the

continued much We your day. joining of Thank great our your you you in appreciate a WOW!. business and how we all to wanted interest support just today. say us Have for of

disconnect. call, now you may today's concludes and This