WideOpenWest (WOW) 8 Aug 212021 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to WideOpenWest's Second Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today, Mr. of President Vice Posen, Investor Relations. Andrew ahead. go Please

John joining Good second our is Elder, Officer; for Financial With morning, and thank Teresa and Executive Chief everyone, us WOW's WOW's quarter today Chief Officer. for me you Rego, XXXX call. earnings

statements get results, to remind that started, may the securities on the expressed effects the our call, laws business during everyone cause forward-looking about statements results, pending financial like June our some forward-looking and XX, performance and matters safe other federal subject our made our statements. on are sell announced of uncertainties the known actual be areas those to make strategy, we will operating of forward-looking I'd These from five transactions our we that in or materially our different and unknown or position are and Before we that expected service harbor to to in factors reliance to implied operating expected XXXX, relating business. risks, provisions other

statements. not You forward-looking on such to disclaim forward-looking any undue obligation reliance cautioned to update place such are We statements.

information concerning or actual our could the of as Factors Risk section our to Form filed affect factors our our XX-K cause filings from refer well financial with statements forward-looking SEC SEC differ results materially to press Please forward-looking the including that results statements. as our additional the For release. with section the of

this In financial certain we to addition, the may non-GAAP and in press release please that morning, we issued call note on today's measures. refer

can can Reconciliations presented which between non-GAAP results our found for with our in GAAP. on our found trending to website. considered a investors, the financial measures is in non-GAAP isolation in earnings the useful presentation not information historical schedules, and substitute believes be financial our for for information as Company information reported GAAP the these While or be of release this metrics be accordance intended provide and

Now I'll Chief Executive turn over Teresa to WOW's Officer, the call Elder.

Quarter Welcome to Second Andrew. Thanks, WOW!'s Earnings Call.

business, Not the growing in again, Once to for period continue year. executing have increase are and last companies the period up X% and only grew XX% quarterly and to also Atlanta, on to schedule The the quarter EBITDA named margin on we shareholders on the same a record will the At results, $XXX our quarter, revenues million. driven from XX% in our second driving and same by billion financial Investor In Detroit. one last believe data in been a sell delivered free and the addition we our place remarks. reached work adjusted have consecutive and enhancing $XXX valued $X.X presentation approximately Relations flexibility. high-speed work. to year-over-year increased by from benefits are we Chicago our data service prepared available including trending second flow. million, to million, quarter, our WOW! end transactions agreements during quarter than the $XXX we was revenues increase company that recognize strategy our than our and telephony great decline seventh EBITDA nearly video and offsetting where included a our great more by areas more release of to of revenue, continued the revenues to in brightest our to page we high-speed as cash the to that complement significant our and WOW! adjusted employees our best press in our EBITDA five website, two overall to at total quarter significant and deliver year of In business, strength growth

enable us are our employees of service. differentiators that one provide customer main Our to exceptional

a second first strategy. highlight of our and The achievements during and these and statistics sequential following the charts future the broadband-first our of demonstrate All growth execution the quarter half of improvement. XXXX prospects of year-over-year both underscores year, of strength successful all showing the with

added to high-speed During second showing reflecting number below total growth, we bringing data connects. the The for RGUs while quarter, XXX,XXX. of HSD of over was adds, expectations our our X,XXX the lighter-than-expected net slightly number RGUs quarter,

of pre-COVID year our outlook in are growth level. our businesses low our We still not are of we as churn. an levels benefit However, continue we positive businesses, from from see commercial as back about for and still to historically yet the significant did to improvement not

as higher speeds. seen the new same year. strong data higher last data quarter there customers customers. participating HSD versus see federal WOW! than period launched increased nearly predominantly improvement with second X,XXX $XX.XX, the primarily more ARPU The EBV reopen. speeds We ARPU has year-to-date. HSD program, upgrading beginning to than program in which are existing attracting The again, adoption or once up more businesses to resulted cautiously from has to due, in mid-May, $XX.XX XX% customers purchasing rather was customers

upward continue consistency our the historically low our key highlighting to second of all quarter, total as this number the grew During quarter, of we trend statistics subscribers churn. again

for Another is customers great rate higher that XXXX, of second but quarter in of And more of service. reflecting subscribers data data. broadband the of HSD-only XX% our only are purchasing becoming row, indicator or underlying the increased not important, strategy for we selling maintained quarter growth which purchased broadband-first of a have meg for of XXX XX% new customers a our the success demand the speeds. high-speed is In third higher, new in speeds high requiring

deliver and increasing increased positive XXXX the increasingly XXXX vintages and quarter increasing the Penetration XX.X%, rate. in XXXX XXXX RGUs continues penetration homes up again from Our Edge-Out XX.X% from last Edge-Out for to XX.X% and delivering passed with quarter up vintages is both to the growth and last XX.X%, strategy quarter. this to vintages

we And and back expect trends those lastly, to John, I continue over of to focus of in like would I and detail before the the shareholders. on call the the reiterating announced about acceleration transactions hand our the year. business I'll Edge-Out into are of to go continuing see deliver and We transactions this some incremental to improvements half expect our benefits to we two the for June. at end

balance markets will continue Company's value when They combined highlighted the the proceeds billion XXx we our transaction, announced also buying have adjusted implied we generate of history, of of highlight we a and As and an with The transactions the while multiple gross divestitures over and products and capital capacity our of towards business. us approximately done EBITDA. $X.X reliable These at financial a attractiveness strategically tremendous provide selling flexibility our trusted in strategic to the affordable broadband what sheet services fast, creating and significant represent support divestitures and to provider areas the shareholder strengthening enhanced growth. expand also and increased step providing our position service as significant WOW's value.

use well support to our our to increasing debt the Edge-Out building as infrastructure expect penetration invest to through We proceeds in and in The investment as continue greenfield our reduce out will broadband-first strategy. markets.

less addition to enables fiber-to-the-home our our broadband bring Our to network and advanced both technology. customers. streaming WOW!tv+ service new to through IP-based other and service, fast to opportunities, These deliver the nonadjacent markets and in IPTV greenfield reliable competitive allow new alternatives or Edge-Out, us WOW! enter

of year. We the are working towards the before completing end the transactions

better is it an aligning of to believe the this organization WOW!. the Chief reflect future also transactions, Officer, and Henry Technology be product focus to we fact product sales completion important Officer, Accordingly, we begun the organizations of company. to our a our restructure Schena, to have towards We step these Chief Customer upon Hryckiewicz. our size and have sales We that Experience structure efficiency strategic our moved increasing of and organization and the our initial will smaller post-transaction our Don with

position. I'm to with while products our services fast, result the and also broadband-first affordable To top I'm our role growth and success As in Chief Commercial this opportunities our and strategy of broadband progress continued EBITDA was our Officer strengthening continued our a and customers employees. our about reliable our in execution change, excited delivering and financial line driving conclude, pleased to eliminated. of

Now over John, detail. go I'll results in who our more to turn will financial the call over

Well, thanks, Teresa.

and our margins revenues XX% up on our EBITDA to we business pushing This quarter, are adjusted HSD significantly made quarter. year-over-year, our the as growing good in progress EBITDA adjusted strong

the ratio to addition, leverage lower announced we to X.Xx that approximately enhance transactions two the In at closing provide our quarter will end us strategy. our and the added at of flexibility broadband-first significant with

HSD continue reflecting items overhead. data contributed speed we that significant those results. about transactions. offset business our I year. total reflects the EBITDA they a some $XXX.X existing an point represent associated a like outperformance XX%, talk Due revenue to XX%, to as declines with corporate the areas telephony, in The our from Before close, to million customers towards the XX% that second are continue transactions, thus other tiers. nearly income to addition video It's for that will rules, EBITDA XX% sold, we new high-speed and the same million, only same specifically year X% transactions. reflect business figures evolve growth also manage. identifiable to higher than revenues closing last increased as decreased and to now the and to out includes the the to quarter second our more impact last increase second customers increased revenue accounting to period notice as The numbers for to HSD the in the figures the service these GAAP to with upgrading financials operations of discontinued deals only as in required The in you margin operations quarter, as will of more to the speak In some column respectively. period in reflect by that And discontinued being in quarter, higher which our excludes the work associated a statement to of review improvement with announced which being we important respective will XX% the continue well adjusted relevant I'd $XXX.X

of also the X.X% the $XXX.X Adjusted are year in to nearly increase $XXX.X revenue revenue to through results grew EBITDA very XX% driven XX.X%. million Total million, XX% an high-speed nearly Our of EBITDA increased strong. adjusted to a with first margin $XXX.X by half million. data

quarter, our from customers to due primarily EBITDA saw quarter $X.X with lower the margin in adjusted quarter slide, second XX% kits. CapEx that by same our last As contribution ever, a the from the XX% million next of its benefit year, more incremental significant second last you our first we can and by decreased consistent CPE seeing year on period to second the and during up quarter, advantage improvements nearly increase quarter margin. in than XX%, highest the see and level this and last In $X the EBITDA million of from taking self-installation the are

last and Excluding June with XX. We're of in With regards consistent quarter. we CapEx free impact $XX.X leverage our very year organically, be second bring of been below ratio free lowered $XX.X organically on X.Xx to we've slightly $XX.X cash to and We with our ended clear liquidity very than transaction, leverage, flow cash but the pleased reflecting million ability cash we of the of ratio or with continue hand our to a second committed our had with total leverage expect Xx to in we After these our of a million, towards achieving a to lower debt. the year. net leverage quarter flow to potential over growth expect before flow. line June increasing in million significantly it. full to the a leverage step year our robust lower represent be that our vastly to past we level will free structure, new our we with off WOW! continues transactions improve closing The transactions, that of the numerous to approximately we're announced also business creating get capital need peers, that cash of significant X.Xx objectives. ratio and while our The transactions operate those opportunities more calculated as

Carolina Alabama, will Florida, in of completion in Michigan, the service South operate the and divestitures, Georgia, Tennessee. to XX we Following continue areas

revenues the as I'd open our are XX, figures respectively. for and questions, Due remains remainder to approximately data June like finally, guidance $XXX of XX-month year-over-year Excluding to in been to service On trailing account the EBITDA without The with with high-speed significant talk an transaction. million with million about growth the $XXX be have of into model forma taking rates the the pro a sold for of before And that the rates as call we basis scope total strong. remainder consistent the would estimated respectively, going adjusted for of months, year. revenues impact completing for EBITDA of their as X% business trailing five areas and financial margin XX.X%. been of to adjusted forward have an decided each XX%, and $XXX.X revise approximately precise The on growth we've would XX the timing of not well them, the guidance this the our transactions we for announced million, year.

We we'd to provide a transactions, growth line broadband-first now our our an expect revenue and are to have where delivering in In the that HSD and momentum strong Day, questions. reiterate model. strategy closing, like close strategy, which an to significant and After us promising we'll on steps in on strategy financial and EBITDA. and and executing on results our we for before we year-end, trajectory. taking up occur our update host will we the upwards building own will adjusted I'd And momentum our expect continue broadband-first like open to we our keep Investor

first [Operator from Kyle comes Evans from Instructions] Your Stephens. question

the on time? Edge-Outs of follow-up could into contribution you margin like differences Congrats over and think dramatically neighborhoods, go decline talk in where And question. the The look kind they're around HSD If incremental run and vintage. between getting forward video, that margin without the cities growth just and do XXXX growth. about telephony qualitatively the double-digit outpacing double-digit could XXXX a X? you we And specifics

do first I Teresa. want the to one,

an there but gross easily, the And percent think XX-ish XX%, is high-speed modeling, you we'll product. next on years to video, XX-plus in think I get sub-XX%. shows know, data three the XX% I It my reality margin contribution. incremental so in incremental can own number. And is up we perhaps, as is percent contribution, a get that the

the literally a flipping of it's whole just So thing.

into just that. about HSD. course massive, in very, comfortable already we've feel XX saw of been months the very I we of massive sort a the So And improvement that really

second the I'll go and ahead Kyle. answer question. Thanks,

Edge-Outs, the a as last the up built backed Edge-Outs year, that recall, bit. we On we you little

pandemic, the had a Just we to stay of home. because to little closer

lot in that by Edge-Outs some built new being surrounded of So we're a business. areas close there does kind the in, XXXX where and areas were were homes filling MDUs where very of WOW! and

doing name So it existing had really our job and we're close a those was of great And a we recognition, plants. penetrating good extension I markets. just think

on and yes, doing doing pleased about both 'XX But the well. that good see 'XX the feel we So 'XX Edge-Outs. return we're that the to getting the Edge-Outs are we're this year

Capital next Nispel question KeyBanc Your comes Brandon from from Markets.

Could for the restructuring Where guys about go side? subscriber to on can you particularly the HSD and force? in Yes. you then that growth general the talk the about versus of expenses RemainCo? can RemainCo assets relative guys sales sold, being more the administrative $XX.X And million you reported selling talk are the

Teresa, one, that. the Do to do you first want on

in a when Day we look the do So RemainCo, time some see RemainCo, when -- competent quarter. Analyst again, fourth amount. we we we at we'll look will at and an But

be things little current And RemainCo growth for And rates historical for prospective the company. higher penetrated location the of company. estate than better RemainCo rates the we'll bit the has are where just and bit growth that are. I and the think a real the with do and to a overall Firstly,

looking be growth for [indiscernible]. for we So higher rate the and we route should looking be penetrated should higher

one the Brandon, Thanks, I'll talk second about around and the force. sales

the reduce made business. we WOW!. the basis a So one new difficult decision therefore, our sure in C-level our proportionate we size announced to in when corporate of said, that And the expenses to line are like we transaction, make want we on with

the for now Schena, hands has to Don part Fortunately, we of a history who organizations capable all point organization sales the a of in of. go has experience place touch running Don businesses he many also customer through And has been the sales within had organization. long good his a

all the we for what the expenses part Investor Day that, talked will a marketing at sales think terms I of about expenses, forward and will be you the give that RemainCo. we fast in as of

guys on bringing that. something for lot RemainCo? you're could Is you If follow onshore Historically, support. offshored up have your that customer that center of at a your I service and call just looking

Yes.

have with that's as We offshore as of operations, we're working. mix a onshore and some pleased well how

So right shift don't substantially. now to we that have plans

from from comes question Louthan Frank next Your James. Raymond

Great.

it And close up. back On any the you guide, there's that expect? possibly leverage just growth, that? grow Can the we could is financial kind would little to driving you you might quickly, clarify broadband going believe anything be that more the reason and you I assume with your flexibility? us business ahead how on that that changing be go more of thoughts clarify what that on deal the in a to bit materially would what are going would mentioned walk you're then operations synergies can much through call but that additional

Sure.

trajectory the the think call is of better not, OldCo slightly if it, the I let's So than, moment. for same, RemainCo

complexity And so different closing might With closing transactions. in frankly, one. close not quarters. I'm the they is, two guidance, I'm [indiscernible] quite

it get typical So starts what to are at. to we really looking

more So much today, if trajectory again, the on it to pretty to most But penetrated. expect be the because as seems same, little said not, bit to of guys. be the the kill better the a call Company we prudent we'll we be

So first I that's the as see part it.

so future And on Great. in forth broadband that? Okay. through then and expansion any thought

Yes, I'm sorry.

one keep low growth at was the leverage the of of effects are what gives be as about. return today bit about time X.X] to we always the for Xs when clearly why growth But moment we of delever to us pursue yes, a got the would thinking that we which for and equity. the And mean going we've might high expectation do? calculate leverage And the [indiscernible] the will Xs reasons best. it consolidated in [about opportunity So opportunity. the go my to we to expectation I the Edge-Out opportunities, first to did this in

So expectation fund whatsoever that being of we'll and to be That we'll be improved that able growth. Xx that take no robust market said, there's again. ever advantage levered

in it's my life if So science.

Xs keep again, a in bit is reality will right we now best Xs get at the bigger. little low So leverage, and until

idea. the that's So

well, addition still right? both our I'd in also all organic footprint, business in commercial Greenfield, the add within our residential to as organic like the the we Edge-Outs for in and our footprints and just well as see opportunity as to growth

Your question Day from Daniel Securities. from next comes B.Riley

Yes.

So expansion. just on the topic greenfield of

and As that you the some think around of in of Washington at clearly a and [indiscernible]. support go kind of about builds subsidized build of you lot infrastructure for kind of sort hedge on sort look outs that floating you

force. As of can markets? kind you sort in is suburban greenfield, Company sales stay the sales imagine of look poor the the kind are keeping. force in some interested you you of that, think I'd about Or Southeastern Michigan say, like at to want

If little qualify you out some venture might of a those. for bit, you

that. So just on your wondering thoughts

Thanks enter, question, for opportunity our We're had pricing to evaluating to chance us of valuable for looking Daniel. the really we that really themselves at the very markets to the haven't bring criteria avail markets for Yes. those. may really high-speed, good

but that are great also competitors, places for could investors. where certainly, a So has there that less our return a so consideration be

a So of all out the there. we'll great certainly, the that at There's talking looking But more probably opportunities lot certainly be future. opportunities. we're about in

super higher doing A just Anything getting job And -- good low. you're And just you've anything related Great. tax CPE CPE really [indiscernible]. anything had quarter, table just then in chain that the there. driving on returns that? was with particular concerns then any in supply the

Yes.

last We ahead sorry, got question. little bit CPE CPE little is great a CPE quarter. I'm So on Teresa. a bit down. --

installation. now included capitalizable any also taking an been that that Secondly, CPE to And trickle that down, going there And is particular line portion the customers are to is supply start sure. haven't the for chain self-installation, in issue. of number

But CPE see timing. we expectation down. is, my the of time, should trend just really over continue it's sort to So

from comes from Batya question next Your Levi UBS.

the Can bit you that the a quarter. little more data about saw you during talk high-speed trends

the you on more How slower color think mentioned through activity many X,XXX to that quarter? Company. and EBB bit And paced participation. has a were please I how new the the

Yes. Thanks, Batya.

to of existing operators sure majority who perhaps optimistic job was done I have But program all industry, terms a would And avail place the I for vast making more new. those were think EBB, of a that customers. the them has themselves good of the subscribers that be across really we've of the qualify EBB been In little in that. -- can

of of that what industry. as definitely an a for I'm not new With was acquisitions. done opportunity So said, proud we've lot an it

But optimistic faster starting the across board, We continued industry. think slower delay a seasonal than back what like than we've the the bit trends We seen up especially did businesses starting very our hoped. to open So little seen see have businesses would some low our decision-making school. fantastic to bounce feel record a which With are commercial. and some business were good more. back, that economy some in I is things trends be a that we've just churn, see in come really traditionally to the we had they we for that, back optimistically little that we with

we're And a to second great forward so half. looking

from comes Benchmark. Matthew question next Your from Harrigan

I it community few could deliver. But from [T-Mobile] feels do of going any you how that a pivoting somewhat about a pricing Washington's markets even And can on [indiscernible] thinking markets? about and, that something I market actually that the of of to you share. like your not results durable risk. gross I ask to assess is Congratulations actually course, be know in deal. as seen product your that Have you're significant your to you anything was you mean already. that's the it's element

is WiFi how reliability, We're Yes, much such fees, and a too from product the as impacting kinds And that is a of watching the well doing our seen I haven't really competitive from think about Matthew. really the difference. always much it's home TMO that we things. as those Thanks, us. And makes value-based. situation certainly,

really that's think excel. we I so where And

our value we're of we competitors, service what's going on to but So, with always up the so good. Customers the course, far of so understand see provide.

Your from Tim next Nollen question Macquarie. comes from

why kind the slightly that. I and could revenue intrigued was I'm on wonder that number the and that very Understanding upside the comp yet side. EBITDA light pricing impact. soft more Maybe power and flip HSD it's was the tough say you to kind on you was things we it that difficult earnings on the there? is performance, of the net be just add to? higher split adds may customers side, and how But a trend of address just to between HSD of can first have strong if year-over-year upgrading might that. then like by number revenue you just look there But the given anything about forward a tiers, strong part with to COVID Is forecast growth. more can there much maybe

net with [indiscernible] first. for pivoted triple launched before that think go we over a the and part. low. for XXXX. second to want year. was bigger then to year first greater double the XXXX, have year, XXXX was we was with what and the first the adds And certainly perspective. John way. to than XXXX I'll if you high as net it turn in as pandemic the of onslaught guest take in We've we we And really, And this really broadband the I a the HSD XX,XXX really in our to broadband this well gained back did part adds more little put Great. done of I It half

about the I I I'll I'm to prospects. realize year with we've also great this John this gain. net to that that if pleased doing that And he good turn add our but wants over revenue So had to something feel the about are future that. good adds we're comps difficult, and HSD HSD And

home solution will the Yes. purchasing up. to see the think the lineup such WiFi several will HSD we just product people not adding people the as ancillary and services, It's I other we whole services quarters. It's ARPUs probably continue over increase. mean be I to tiering next that

that HSD. soon. hasn't any on So really There see been I price any don't time action changing significant

this up kind of tiering much is So rightsizing. of people the and just

I in. to as option think as an going to a want and streaming up more continue going tier becomes folks are people more for coming and greater to just bandwidth

for to change I isn't it's So a going positive anytime think trend soon. It us.

-- in Right. even also, higher can also we good said gets product, WiFi, selling WiFi of -- a six which really mesh we just throughout we've has to be Tim, of version sell And also, It launched also very course course, which co-home the the add, WiFi rate. of our network speeds home.

So all I think really difference. those things a making are

-- No, a Yes. of level? give proportion a are And it what thought type your I the number. was versus a of just given number subs sub kind have actual sense. makes gig HSD of all number you that growth missed I you you X can might the revenue interesting it, did on of give have or

keeps are level. that, of tell did above. webinar, We And XXX can give certainly, and for And customers chart we don't But in usually that gig XXX rising. proportion lot X the a I that show the many are the No. on out. you meg how and mb

think coming a share of I it's in. the significant customers new

There is Elder like for to time. no would further to questions call comments. over at this closing I the turn now Teresa

this and weeks. to us many you so you coming the Thank support much for interest of look great forward of WOW!. a morning, day. with for in speaking Have your We and thank you joining continued

you call. participating. for conference today's concludes This Thank

You disconnect. now may