WideOpenWest (WOW) 9 May 222022 Q1 Earnings call transcript

Good morning. My name is Regina and I will be your conference operator today. At this time, I'd like to welcome everyone to the WideOpenWest First Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions]. [Operator like Head conference of now Posen, to turn President, Vice Investor to would over the Andrew I Relations. Please go ahead.

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

relating call, expected Safe started, some laws matters forward-looking our make materially in get to our those expressed known other operating to Harbor or we operating and will our the our provisions to would Before strategy uncertainties remind everyone forward-looking that made about different our from These we forward-looking factors like of position I federal that, results, be actual and are business the and during to implied risks, unknown statements securities our reliance in or business. statements results, subject other cause statements. may are financial and performance on

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

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

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

the website. earnings in trending GAAP. or as of While considered historical non-GAAP in isolation, We've metrics complement to also information can presentation substitute and intended morning provide remarks. information a our be to for, is for our schedules, our GAAP releases be results the this found useful for investors, found reported on prepared can company believes and included between our be which this Reconciliations financial the accordance presentation non-GAAP these metrics presented financial in with information a not our

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

to call. first Welcome quarter Andrew. earnings Thanks, WOW!'s

XXXX, to Our and our expanding continued business end greenfield progress making all right has expansion, our forward – our from taking gotten we fronts, where pleased to off business. of we're get contribution in path off the speed plan we're the successfully to report high results. to left increasing great three commercial steps the there through our shared business. beginning up year, outlined edge-outs, and We executing footprint last in picking and our show they're to up I'm start grow our data a at on

nearly XX%, speed For first quarter, from forma X% our the last period and revenue data year. pro basis, same respectively, XX% revenue telephony declined and high increased video the on while a

EBITA our high forma by data forma The the nearly The margin to metrics quarter. in increased strength. pro EBITDA adjusted driven adjusted business. Our growth high X% high $XX.X pro million, business also largely in show speed was data the continue to margin speed for our XX%

of low our RGUs number levels with we again total the ending XXX,XXX. first speed churn, we the number added quarter of RGUs, high XXX,XXX. During total With year-over-year X,XXX the of and subscribers data once increased HSD to both bringing sequentially, consistent quarter,

for in the increase an last again of meg but customers a the speeds, customers approximately The was HSD purchasing with majority new decline while promotions also maintained to Our slightly Consistent as pay speeds quarter. by and buying lower customers last quarter. above seventh our buying High of quarter. XX% over XXX data are speed last continues have year-over-year we customers, sell-in customers only HSD the predominantly is adding $XX new quarter, of data off new focus first the XXX same on period speeds driven meg. once ARPU up XX% of purchasing service from sequential than consecutive rate reflects are a marginally higher increase of in only year,

Our the XXXX deliver grew edge-out past vintage strategy continues XX.X% to for XXXX rates. growth the vintage and to to increased XX%. penetration in and homes higher Penetration

pleased We growth our the continue be which vintages, to productive. with are of edge-out increasingly

for XXX,XXX part million press Central we've to South the Florida, and our we this our edge-out announced add additional grow where XXXX, greenfield of homes future in release, seeing momentum that ability Carolina believe Carolina, from a process. we confidence As said strength by the greenfield XX% invest our plans market his as County, in footprint, success homes increase nearly our a we and XX,XXX in homes combined an the identified reflects investments our plans we're past. greenfield a are plan in total Greenville our we long quickly current latest of and to led our a we in morning, of business to and review separate will XX,XXX our $XXX in which doubling This targets The and performance of expect comments. increase our to term efforts expansion core The increase past markets. John investment before, to reflects Central us supports penetration to Florida South where now

market, forward powered moving entrance Mobile our Reach. We are into WOW! by mobile also with quickly with the

markets quarter. connected officially enterprise-wide the no an to plan by contract of our on We to month, reliable, to in earlier text. cellphone excited stay offering customers southern We're unlimited our one launch talk provide with this and followed the additional are later flexibility a on launch in target third

developmental minimal additional the further looking great plans. enhance for. To We expectations quarter offering believe will start mobile of with this quickly with operational our have first partnership our retention, and a conclude, customer part. while acquisition and significantly Our Reach our service been enables the year to customers our WOW! or work on greenfield service pleased our the enter to that with I'm providing strong results, increased market

both growth growth we of through of execution first our XXXX organic high our the We're leverage in greenfield company, of next in footprint, transformation front is significant excited commercial through self-funding, company. builds. footprint the further our us growth and the the the including a broadband residential our a about of off customers of low strategy and capped XXXX expanding beginning opportunity While continued as drive as stage

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

Thanks, Teresa.

our ahead. offset more Our by X.X% reflecting revenue solid in continued $XXX.X on opportunities a total results declines delivered the quarter to first progress quarter, increase in video EBITDA HSD by the as on customers, has to addition customers predominantly respectively. execute driven declined The speed we million, X.X% than data last the of pro and in which the first forma first as to make period tiers, revenue, revenue X.X% is well as and telephony, strategy In speed new high which our same year decreased from XX.X% existing and XX.X% $XX.X higher up adjusted million. broadband pushed growth buying

the our the with On annual to XX%. adjusted XXX our shift our continue margin base next to basis HSD-only quarter, from video we basis modestly in the subscribers. expansion, operational has last contribution to forma paired incremental largely slide, cost quarter EBITDA a pro Incremental first increase result customers. period to margin but our rate contribution for efficiencies, the driven of from programming margin due last increase declined Margin see year-over-year on same favorable as a points increased year,

following divestiture a the areas. service structure Now on cost progress for update the of five alignment our

reduction In outstanding held the period of last encouraged are primarily As we for financials. as same as Approximately million from with of CapEx total April, in reflected we expense, $XXX.X reflected will of million our in spend a This to are of quarter, million, growth year of ratio first enhancements, the X.X made paid commercial taxes be supporting part but second ended our million identified the an in the the opportunities. continue for the as reductions of in continuing few expansion to of our and over quarter These of from we reimbursed the for million. CapEx, leverage improvement $XX in cut reductions by pro the additional in $XXX.X $X.X resulting transactions. million the operations of in from is our service represents million. in a as of CPE primarily total our income. pace of debt This business, offset SG&A decrease XX% the costs by other our which to to first incurred $XXX adjusting which $XX.X times, divestitures. services cash were decreased quarter well taxes cash forma headcount, decreased TSAs The next are by to investments related our the years. quarter, and incur the $X.X costs We million latter bringing due primarily in cost total are in for $XX.X related to presented out savings costs also approximately base. the the the We're

If you investments the of to the adjusted less of setting greenfield EBITDA million free quarter increased right first $XX.X cash same results look for million, last period our up we the forma path unlevered the adjusted this at as flow, later $X.X slide, CapEx, ramp define pro a fund which side year, to from year.

XXX,XXX growth with our We'll having future announced greenfield be plans do call the outlook our we been this we about second really for that doubling increase fund passed are speed to by executing questions, progress utilizing quarter. to I which making for with greenfield not have long-term cash our for before the we've targets and the leverage. able operations and want homes our open identified we talk the and morning, our Finally, We're our up to expansion anticipate updated to This plans XXXX. markets. the and we from pleased

amount the million. $XXX will We increasing to capital $XXX be allocated from of million

of increasing increased targets at set Day. we're also As Investor the this that a our long-term investment, updating and we result

up to X% X.X% total $XXX expansion through target XX% EBITDA from year will spend average increase capital slightly to X.X%. to The our increase will And million for expect XXXX the X%. from not XX% this up X% to between to CAGR the for will to revenue for annual expectations now X%, XX%. previous adjusted XXXX than from for to XX%, the for of and year. to X% Although change, CAGR XX%, be more CAGR increase We will revenue up HSD per the to

for year. discuss full quarter to our and outlook like Now the I'd second

We expect be and and million million, adjusted be to and to million between million. revenue million and HSD total be between between revenue $XX $XXX $XXX EBITDA to $XXX $XX $XXX

HSD additions also We and X,XXX. net between expect X,XXX to be

million. we the and be million, $XXX For last and revenue we're with $XXX between maintaining revenue expected to to EBITDA million, the $XXX $XXX forma $XXX to pro million quarter, year, million $XXX be total set and guidance between full HSD million be between and adjusted

to between net be continue for the year. HSD also adds expect and We to XX,XXX XX,XXX

continue these And the first and open We're Our guidance now the ahead in our another line was metrics for strong closing, delivering thrilled make our progress up this with would updated line growth results. are executing as about for we across strong to In today's broadband long-term like WOW!. on targets. good we in expanding strategy, momentum, to questions. quarter

Instructions]. [Operator

line Kutgun Our from first the RBC question Maral of will with come Capital Markets.

I could. few, A if

Day, of trends. in based the more the of had then, of could talk it's XXX,XXX. net from most expanding the that dynamics XQ? to the just encouraging XXX,XXX more. subscriber Can expectations back plans, giving to saw greenfields XXX,XXX what's importantly, adds greenfield At half or to the for investment think you And about homes driving you the broadband ramped you expansion already with from you that last I confidence see on First a could doubling what's path into half acceleration the your and expected Analyst underlying to perhaps, somewhat the passed first signaled year see you in bit and a X.XXX guidance, on homes December, passed the envision your And the QX on you the X,XXX year?

to was So, your targets. presumably, some had back you sense scope increase that there then,

constant which are Or in the target? at markets, you might look ahead, is, in stay guess, this of you result question to increases evaluating additional state in the So, XXX,XXX I would you continued range? the as total expect

I'll ahead and start go off.

we And what uptick can what saw for what first First what we're all, the by seeing the gates year. in the a significant having This is and are the out making the being how day. speed on that alternatives WOW! we encouraged do self-install We of to reliability, a in are of fourth think which, for, contracts, the really of our in market. well broadband really ability subscribers, that we course, very same quarter last is from really customers the looking I also were by itself quarter. easy was have compete shows in with. of saw provide And other value. our by our business many also not we have to And strong choice installations that sure but and to we do marketplace

we marketplace. who resonate those with So, customers the the in

I why think of to are why customers WOW!. drivers that's So of some the those come

we really in seasonality some our to normal believe quarter, I As second at return second we're to quarter look the industry. starting in that

If you would bit go usually things a home back when the from normal, second bit couple back as parents. come a back kids in were quarter a school, step with years, down more

is think more normal that And to we seasonality so, likely happen.

like the marketplace, way the I because We WOW! have year that the but in of also seasonality, mentioned. competes second once of again the because that of confidence in half

our more commercial are for out see markets the competitiveness. all also really to this business. that and on confidence then in numbers. those happens us launch year, later us side with mobile full-year I in as our greenshoots of later We to continuing launch more will added that really more We're products addition rolling also space as the month things new believe, give this commercial well, And the we the give of seeing

the So, and encouraged question there, XXX,XXX you we to by XXXX. by to step are what greenfield, seeing second we're then up passed homes decided turning have the to that

has Day growth recent just back did most great the we've seeing the a and what that for certainly thinking and always be. passed And Right John, we'll to You're market point that in that? decision right edge now, to were homes XXX,XXX certainly, like be on we our that. seen to will penetration what we're vintage about opportunistic right trying the say about we reinforced the else I would that flow. great anything out, continue And is everything we Investor to especially free that of on in through do add to look there fund XXXX. cash we're is think feels And, you'd continue But further. greenfield that

other that that this Kutgun, fund is on is Again, here from the cash the the the side business produce. of But concept it the can we idea of flow leverage. boundary

times X.X as So, from sort go Investor the at We're of you I mandated Day, never times. board suggested above recall X.X that we now.

we're then. XXX,XXX we we the was that at fund it amazing out homes, there and could that some about if So opportunity, of build we'll think from But now, cash for looking the generate.

more If I maybe could on just M&A. sneak in one

sales. opportunities clearly XXXX any You've asset you environment M&A? see today's transformative had of a additional in with very for Do sort

Right the executing and on our organic greenfield. as what within we focused are the now, so running just well on doing we're as have excited plans business, we with footprint,

what's ahead we're So excited by for just WOW!.

come from Levi Batya question line UBS. will next Your the of with

two the business you and video expectations? the contribution ramp the current exit cost And other side. any Can And that in that on ramp about your questions to seeing will in accelerate inflation the the potentially, impact of service, plans Few the up can cost on the you're of environment mobile to you is versus what talk and we quantify there even the a think so see when margin costs, more? way in items peak?

I on team will and this, tag John Bhatia.

prices taking a in costs, maintain attractive allows of on we continue customers of best on say, overhead of the to little the out costs well. extremely and well. to very our be our And the talked business us I inflation, all, First I for some value about John as feel have like would marketplace. the bit That we're

John. mobile operational our over core about questions and costs, is touch that very to that with ways impact each their us. Mobile, the partner mobile low really Reach lot who us. cost, briefly, lifting a is on into the of low which to We're heavy doing your mobile, on I'll of getting we're talk business it hand working the for business, But the On is

is So, us a that allows asking for that service another us to us not customers provide. to trust cost for it us, really to our and big they're

XXXX, way since we've strategy with of bigger that. we services. then, volition strategy of video buying XX% of services the and cord at buying and continuing are has streaming broadband to positive, very now customers beginning So, customers That's I that own business approached it's at the their and the a of the first went been over why And broadband cost new finally, our taking think core the looking out WOW! video meg the cut packages. of are XXX of

continuing. So, is that trend

and provide from business. John? And service. have those customers costs. or away we programmers curated pass the our to who As we a still have With go broadband is said, to customers services from in video, that up cost pay costs that to on to that decrease want shift do more and there video are TV continue to those

something this are with Just set piece. costs. The Bhatia, of quickly, the is ongoing structured, share. on up for amount There rev a no we a money, It's Reach. way program modest mobile

So, the come revenue the into we when this items. end this of launch our be as start we in line see QX, in share month, just other booking in rev we'll to

with that. there's So, specific cost that's no associated

I that's one. think

On there of lot give enough, government there's out sure everything. the a that impacts I'm programs people inflation inflation Interestingly will some impact, relief.

at and of we'll us But, the impacted keep this we're abreast of negatively really top hasn't on it it. So time. certainly, issue

linear as if follow-up you [indiscernible] just over pacing go a CapEx if sort CapEx Maybe just commentary be double just Can the to years? the of and on expect targets gave. could exiting year next pretty you you the clarify quick you you two over this

of part first that is the to answer the think I yes.

bulk pace CapEx, which we linear. the Because is this year expansion through pegged that this come sort second should first of the after the it $XX I as be to start this we should going we more at the do of greenfield year, million year for the year, of think building. in is half to be get the

with of When forward, permitting going to biggest million CapEx of on The for and year as of upfront crews was have and first million kind forward at greenfields year, on part the that be of will $XXX will CapEx identified go edge-out, plus all approximately be have which like stuff. to growth three-year doing is linear is average spend that growth. part greenfield, identifying they will be per we $XXX of more that properties the be the the the the average some about going and what the the of of look doing we as we Growth million, because plus here greenfield. And and been commercial, can start do. $XXX properties

me. see to you opportunities for as build greenfields? one funds any Do Final state into you tap

aren't our top those as really targeting We criteria. areas

certainly, areas could will sticking So, of be But and to we we the most those penetrate customer the provide criteria where opportunistic some we're customers rapidly. successful alternative arise. know an and base with in if those we be really

next come Frank the of with from James. line will Louthan Raymond question Your

I taking you market? you decades, a bit the market? market for real and see your when see There's new pricing in terminal ARPU into in you when of for two of the modeling the want how market. concern a What an you've you I going you changes a pricing you is pricing down of this. what for share to the What incumbents when world impairing from Since enter in do give think competition cable business that a want to it? increased from come idea over perspective enter much Can us to drive multiples. the in talk about been entrants competition from

the in choice, XX You're marketplace. business, of brand a WOW! the be really right. really more have the them we've and in challenger much come years to in and customers to competition It's DNA give been the for

with with really are business have why suite customers. that customers and the the value have have, are marketplace. we us. in generally what services such have stick that And is that's with. We and And that a customers keeps lower do how churn us bit pricing we are low reliability, resonates But the than with others with what to the easy along speed, of we the that

to of are can we we into whatever the systems, packages revisions down sure billing local, go consolidating we've that the capability hyper have billing market. make the and system, we market, to being competitive, even when So. nice a to now the with about with of done local dynamics more be our new one pricing what's

traditionally we're we at much As so look going have competition. greenfield, not that into markets had

And Does be reaction new bringing so, WOW! that for that of we really lot [indiscernible] we'll arises. that from nimble we've competitors about the example, answer a Frank? dynamic. coming can't nice your can that I But say seen in. if immediate be in, always thing question, is that

bit little that cheaper, people's Yeah. on is When sounds little attention you're the need X% an you offering pricing you or XX% you do like a more specific say few a or of front? think What get do cheaper coming – the and a to It be cheaper? can on X% you it's front? service-based decision, more but to pricing

most I'd always competitive the dynamic, sure X% to say because pricing are bundle. varies all things cheaper, don't say our clear, to and be is it They the to service, everything. competitors there. which But that contracts. that different customers make whole with XX% probably usually. bundle promotions we're we're with It's we We out And with offerings, video, I'd have with it the do. with require of don't

of Your will with Nispel Brandon KeyBanc Markets. come question line the Capital from next

of ones. Couple quick

of year HSD make curious you of gigabit point of You course and maybe over customers, the talked ARPU ARPU rest see year? this trend and the you maybe on point, you HSD couple expect trending And to next that is promotions quarter. you to above today you the and could meg share call how how if about the sell-in your you’re Can sequentially pressure outline over a XXX of years. out mix from that your the throughout maybe

a that's because competitive of trying these was taker really it gain really, that And in On share marketplace. we're a promotions we And some bit sequentially. the share. down HSD are to of doing, ARPU, yeah,

competitors XX% the the year, one And that it is with good we that's about advertising all see of all goes that on us. that our Because alternatives are for do, to customers and that So, look around there. thing compete out causes always broadband promotions what very for customers of it look I speeds. will again When to as the well. are up ARPU having as think we HSD probably to take for you And ahead out, higher continuing XXX pointed that experience. too. over else rest add start have bit And know pick just the we I there's see those customers, John, a call number they customer a customers, majority, of they're keep up ARPU now over service. X XXX meg I And taking we great want in our bit usually them some to change meg. of We sometimes accounting new are to our there like moving Xo%, now taking those out anything XXX of above because make many taking and that and that Most as meg you rules the are gig. customers don't are specifically.

sitting going effect calculations did a now, from to a also like and fighting We're some the ARPU. But [indiscernible]. predominantly XXX But again. right have up we where have looks ASC promotional been start complicated always modest it activity which it's on stabilize chance we're

come will Day the Securities. question next Your with line B. of Riley Dan from

here, points you've to on up double you're that just what detail was commentary general Look, seen it? on a so your more ramped existing and that what just early or give just really maybe so you greenfield it could seen in if with given far, little this us any it build greenfield you've you data led you've

in last it we at as talking greenfield well really at that when intensity cost and a the as US targeted those good we competitive a demographics, started less with And build, to our is that the across with back launched understanding is this with end looked penetration. on And looked and overlaid of criteria and continental mind. Our in all markets. assumptions our we about first our then the of ARPU population IRR of and whole markets dynamic industry year

of So, use. broad-based criteria those are kind we that the

to better in to and wow, to As we've we'd that be Florida there's and more really be XX,XXX market. Orange of the delighted the to and say, community looked understood there, County thrilled we gotten County another closely mix serve households in able this of know homes were passed Seminole

to XXX,XXX. takes So that up alone that market

we really Greenville add to our impressed were as and South the County, delighted Carolina, addition, them are by of market mix In well. to

by do and free leverage stay encouraged we're the we're funding seeing ratios under But flow the what that's with we've as So was within how our XXX,XXX about. Right down look limiting factor I'd identified of homes criteria staying lot a cash and now, communities. that list very say we of opportunity. And our it of can is we John and through that much talking see biggest our passed really just opportunities, receptiveness already. those we local

we've It's got the program. since formerly update EBB while a an on been

connectivity I with Now, affordable bill. the it's the program infrastructure think

are Just program. any from commentary on trending how that subscribers

customers continued at $XX in highlighted to grow the We're offer now year and subsidy would program. the actually actually we see It's we've have who today have and very House. customers transitioned the for a today. I'm in town over transactions Breeze broadband excited last affording about program Washington, actually X,XXX here Astound who being to now, this, since XX,XXX via that that's customers have the overall those some active or ACP two have quarter. We and line. XX,XXX connectivity per that program And EBB affordable on last did DC month. are supported that We White now have but on of difficulty up either we over

definitely a feel sure they to companies. home those the as learn people we those for continue and now to. happening, customers can and So, divide But great isn't are that this make digital from program work being by cared that to is need like

from will question Your Matthew Benchmark. of the come with Harrigan line next

from running not there's sure variables? if you ice infinite private opportunities? you? to broad are really equity, like is. this it XX% or But XX% point, Or had it going of Greenville. US, swathe I'm if to really, was or maybe the quantitative full logistic a Florida just the really your you've think not you're go infinite, well concentration there's even you sort what's largest where you XX the do just got But really vantage come would or large for across opportunity with Bett from regression be immense against of this an the whatever outside as is qualitative market, an through variables cable taking as a you've do XX in variables the the an metropolitan maybe of segment that algo US surprise areas? Sun And the it opportunity. But Clearly, and some with really some capital think of

Absolutely, that. that an feel we we and and be be can in And costs have many that look the demographics here. that our aspirations things even talking believe and than at, We what and definitely successful. alternative are regulatory challenge and come allow and communities all see like would and markets, other environment bigger I a appetites would to we're us much operate to very that

that we're return make right be good the for So, we're of the much yes, investors But we the here. opportunity stewards think judicious we sure along the that is and way. XXX,XXX getting and the our CapEx than even have, bigger going to

the from will Your Joslin Suisse. with next come question Grant of line Credit

price, for second, step pricing and increase right contract base? we've higher customer year was of model try lure step simpler promo this with some to year seen you And year, then of then promo still kind wondering, for from that and followed two for pricing U-verse the providers is an but switch I two. the year one AT&T month opportunity by away over this up price initial to Is WOW!? step a First, up up pricing some broadband

as solid variety just very a have value of promotions We customers. and for everyday our pricing well

competitor, So, vary the lot promotions a by by market.

And And stayed provide It's it so, been. of by evidenced churn stay how great us with duration and it But WOW! with customers we varies. the customers value just time their for I to then term. our that's low record the low, throughout think long has generally for our come us. lows,

day. compete we every In against AT&T terms of AT&T,

price away a can those us or every So, take and just gives customers yet lure increase reason may make certainly another change share. that they we

And those each we know an things of for in all doing sure WOW!. and our and are to able bring WOW! certainly, be customers them competitors really give nimble each are is what alternative our to make our what agile and of very those to understands us that So, over opportunity. markets

for At closing this time, remarks. over Teresa back turn any Elder I'll the conference to

Thanks of appreciate your and WOW!. a in interest morning everyone this so for continued joining has Hope us much. support you thank day. great We you really of all

Thank you and does conclude Ladies for joining. call. gentlemen, all today's that

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