WideOpenWest (WOW) 3 Nov 222022 Q3 Earnings call transcript

Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest Third Quarter 2022 Earnings Conference Call. [Operator Instructions].

I would now like to turn the conference over to Olivia Ponder, Senior Manager, Investor Relations. ahead. go Please

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

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

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

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

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

information considered useful isolation presented financial financial GAAP. provide not non-GAAP believes information investors, substitute be the While information the with a accordance for or of in measures is the for company intended in to as the presentation this

in be website. trending and can our found schedules earnings our Reconciliations our historical between for releases non-GAAP GAAP reported our on results be which can and found metrics

remarks. We have for our also a morning prepared this presentation complement to included

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

for qall. excited quarter the to our strategy Welcome Olivia. third and growth I'm with and a WOW!'s what will challenging we about this know results pleased quarter. quarter, I be earnings future, am despite Thanks, our fourth

are growth to focused with executing we a shareholders. confidence morning in we As and drive It a significant on strategy bring outlook strategy value team, business mind in that our and to earnings continued our made management our that our extremely in release. our announcement customers is this and and

Our lowest Board of the us over repurchase our It remains million next is will industry. shares affect materially to which Directors critical strategies XX in months. has that the reiterate to up leverage authorized to capital profile, of the of allocation not one these $XX

get our me to let results. Now

quarter. down a XX% Without quarter, revenue X% the this our respectively, data catch-up revenue record $X.X For last million. declined quarter, we year. year's declined total had this XX% from onetime which last approximately was third a revenue increase HSD deferred would included revenue and of previously onetime X.X% revenue slightly the of HSD from and Telephony as $X.X high-speed have million year, Video period same last

nearly Our of high-speed X% XX% business, which adjusted EBITDA reflecting of XX.X% from increased margin revenue pro adjusted the to represents million, forma revenue. the quarter. high-margin, forma $XX.X proportion now the EBITDA pro data for The total nearly was increased

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

drives which XX% maintained metrics during purchasing consecutive XX% figure rate the an our his higher, average our as above with will of quarter, remarks. data high-speed further ninth reaching the this John financial core we quarter, discuss selling For nearly customers only,

consistent of with taking tiers our speeds adoption the meg, recently X.X ARPU service. are majority quarters, have the customers data been customers customers in has with buying Also gig of the prior as we offered stayed including as in during HSD we consistent with add past purchasing XXX We contributed higher which quarters, new largely fiber HSD data above speeds new high-speed strong speeds, higher will the markets. believe customers increase activity, continue by buying as cost subscribers increase promotional HSD quarter. existing ARPU to and of begin the offset to $XX.XX see

continues especially Our to Edge-Out strategy with in drive to vintage, our XXXX increasing XX%. growth, penetration

we stages vintage do continues XXXX and of the rate early this to maintain a homes vintage. Our as in well pass penetration double-digit more

rate. penetration Our XXXX vintage a constant at remains XX.X%

into As greenfield South in Edge-Out performance ability we've investments our Edge-Out Central recently from said Alabama announced Carolina. including believe to our our supports our in quickly and markets new markets, the before, confidence and Headland, grow fiber we in Florida

addition our existing plans, X.X. in high service, enhancing to highly on a our infrastructure architecture expansion implementing continue greenfield we footprint. and focus multi-gig our leveraging DOCSIS path to In includes split efficient ultimately This to

in groundwork Our this early is activity for technology begin organization lab, laying our next year. currently the and will field

going in has also deployed of and successfully with multiple QX, of well, through partnership and channels. mobile our all Our sales as been Mobile is markets Reach

Now believe continue in environment I as before couple expectations not not the subscribers if be year. I to financial HSD over growth factors that our we the emphasize reduce for has and leveraged our space. of for I'd the a to us discuss HSD to like to remainder the for results, for talking issue to John of, minutes one like drove our call dampened we the adds hand our spend of net this to about would outlook the least, especially strategy, the that company

driving rates cooling translates footprint are which material first result higher anticipated, a the anyone moving customers than interest rising our aspect into factor add in subscribers. how key been resulting movers. of housing Potential the of significantly fewer has market, off is The inflation, into of one more we expected, which than faster up

record of demonstrated successfully as rates. growing strength competing the of We have proven penetration that for a track by our business,

help economy, despite customers' as do we our them the fourth to The have which priorities. with also second number a factor, connected financial projected with negatively numbers, has been stay subscriber working competing impacted of customers quarter to

To this than stay their on customer to terms disconnecting rather help end, our we extended them service. platform

had the remain unfortunately, of to on portion ultimately many a these platform, disconnected. did customers be Although

are of impacts through disconnects these net fourth the We quarter. flow in the our adds seeing

the our To of strategy core strong. remain aspects conclude,

Edge-Outs continue our increase Our rates. to penetration

with maintain expected with Our real is And first operations, doing in the this thereby expansion importantly, making from customers progress to cash of profile. quarter. greenfield we leverage enabling are us our low all

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

Teresa. Thanks,

quarter macroeconomic third the delivered despite results The environment. solid volatile

X% broadband-first data XX.X% revenue In declined reflecting Telephony, revenues decline respectively. and to continue in in and our growth. strategy We Video as third on X.X% decrease quarter, X.X% high-speed are a the total $XXX.X building million, a for execute now we and to

the to which same $XX.X result is drive XX.X%. was which increase adjusted revenue, to Adjusting forma last in tiers, buying third year grew to year-over-year. growth. help for the was Connect continued of decline period HSD deferred the work million part forma X.X% in speed Dothan, offset completed in revenue new million, our X.X% that Pro The promotional customers existing quarter, initiatives, higher last adjusted America margin subscriber driven partially of deferred by attributed $X.X of HSD Alabama by the This from Fund. predominantly EBITDA recognized pro revenue, year driving grew and as revenue EBITDA

adjusted only. margin shift year-over-year next XX.X% to X.X% which sequentially contribution growth in of period a the the incremental leading indicator metric, cash this strong for to same flow favorable from EBITDA HSD it base importance generation. we as as On reiterates contribution the a our free Incremental the see last slide, the margin and year, increased result represents growth of and

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

As identified extremely the represents of to and pleased few XX% of for our on ongoing expenses. is reduction reducing $XX.X over continue managing our months next our third years. million. -- $XX.X We're we XX approximately of we're costs, the on XX% of million the quarter, focused that be trailing ahead savings schedule This

We ended the ratio year-over-year $XXX.X at in to $X due pro In is on total partially CapEx. $XX.X million cash the of million. holding debt investments decreased The continuing expansion spend operations period our our CapEx same forma million, decreased million last X.Xx. quarter, CPE, from by total offset third largely the made year $XX.X improvement by leverage and of with outstanding from quarter to

update Now Greenfields. for on an

power primarily split spend, Although end quarter to on public and due the additional Hurricane constraints engineering the by caused Ian, of costs. interrupted utilities of at between the million $X.X construction contributed Greenfields

We lower expect slightly Greenfield planned CapEx year. this than

pro of adjusted to million forma this right for Looking cash from as less allocation enabling at side which is million, results last year, to CapEx, morning. free $X.X earlier the quarter which adjusted flow, the fund initiatives same $XX.X slide, capital increased define period us we the the up EBITDA announced our third unlevered

outlook leading our a open we years. macroeconomic high with like to point questions, environment inflation of before for year. remainder home many challenging their for to difficult provide the The the with continues interest and call the to rates sales in market, rising, lowest at housing be I'd remaining very Finally,

HSD be between now our outlook the expect a X,XXX. of the continued for full revenue change year. and a adds us expect revenue to to is X,XXX As The $XXX now our for negative much estimates this, net $XXX and between result lower we year to less in and driving competition, We for for broadband extent full subscribers year to be HSD million. positive million

to $XXX be year million and to $XXX million between million. expect and between EBITDA $XXX We million total revenue adjusted the $XXX and for be

environment. and lowering was our and for In to expectations a the to our commitment for another prospects, like up questions. closing, line the we'd conviction we our reiterate And open solid this to quarter now want remainder our WOW! in our our shareholders. very growth and customers Despite this strategy, our year, for volatile of

Instructions]. [Operator

Financial. of is with Chris the Schoell first from Your UBS question line

you Thank your fourth you talking the the expansion competition terms a you bit are driving fiber But relative in for competitive is for maybe to have the Maybe subscriber that worse what would backdrop. on you little of by the a And anticipated? than from is footprint? what also can bit new might seeing wireless fixed color quarter. broadband start headwinds in impact you say about

take it. and ahead go I'll

I terms the is the on saw those forward interest homes. of quarter impacts, in this fourth around quarter, in inflation budgets, seeing the the really inflation of what also but on fundamentally, rates some think the even movers, so, of too, consolidation people's for going impacts and what And issue we're we is

kind available. previously. we've of the as are than pool growth It's of what smaller level just So, a what seen opportunities

at I that staying our like though to is churn would thing One is record lows. reiterate

successful And so, that for are very to to loyal and those us, we are us. competing are we in customers available that have, those customers very being

this at wireless. is on to One look would And seeing we fixed are and closely, you compete point. very We're how are any in our wireless, reliable. just we the data material And mentioned of business with speeds mind we around from the things wireless faster. impact not of fixed at completely our fixed kind keep

they that pricing if day. sign day. vary customers all us, they'd know And speed that such receiving customers the is be throughout with So, get our It can the up doesn't is could our some the with even price, if us higher and mobile, to together Internet wanted And of a our $XX.XX same offerings. mobile for pair both speed. customer from for they get

about offerings very a and good issue. it we we the big So, hasn't been have, that feel

our Our with the well about the right out ILECs the we that how But competitors there, always is and in feel and and now, our have against compete are they been, MSOs to ability main same, salespeople compete them. that them. are very versed good to biggest are

us then on you it term plans can And take leverage might about for willing buyback. of profile. And buyback buybacks the to and of But the leverage you should appreciate be you've How the the articulated? impact that I maybe how over pacing said program. think network won't expansion the remind the you we both high maybe just the

Yes, I'll that. take

X.Xx we on anywhere quarter pretty leverage X X.Xx. So, levered sold year won't and the much When last end. taking on leverage massive we record of we the deleveraging, of be we're question, the markets did saying were above our the as

go we not So, would above X.Xx.

to the from a do little generate. expectation would we lever or much can massive of up up be is, bit, tariff. be It's And we'll the we going were a something X leveraging to this. a like as cash to flow it And like free X do not as we if

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

of the seeing? those? can apologize, I But through got cost earlier. and you steps all of you from sort are bit of the little you're cut think sort of continue abate how that on us walk line I those, long taking to see pressure some a cost do what to off you some pressures And you

certainly, one like WOW! rest done always with the we things by Well, have think the is transactions, even has that on last sizing good and a Yes. job year inflation, the And of our been of markets being are last that we about impacted selling Frank. we've containment, overhead. world, proportionately the cost we and year, corporate a list the off in over been since higher our X did process the I of

So, happening and in the knee-jerk now is this take the This would to done we've said isn't WOW! that sudden that always something made that reduction on we year. last business, progress way a significant just reaction has economy. we

long where want And in business reaping more emphasize that few experience. efficiency, for story following operational our operationally our last us and now and processes, a the the of years been to just the of some all with -- also benefits Frank, customer over transforming I the and enhancing you've that addition, In position making that a systems and -- we're been of efficient. our time good is we're we've it's

a So, really there. it's win-win

For for broadband our number or…? Anything of both example, more because down years. we're John all substantially and every made. improvements last want first, is as of of it year-over-year been the the operational That's has truck for to couple service year calls just because add, you else we've rolls

things to which midst $XX to here, right? we cost-cutting we're million versus years. No, competing we in $XX.X TTM we program, that's did Frank, the million on X going of said get it. promise over there's So, the

slightly little impact a inflationary mitigated cutting are numbers. out, by it's costs on the and then those So

we're a will. of steady keeping So, if you state, sort

done much And improvements everything the as cost cutting a doing all process on as absorbed a all said, we're focused getting very not it's because of bit out. we continually very, office, and back by Teresa we're for we've the of So, But boom the the being with things cost little we're driving can. really in inflation.

but working So, it day-to-day battle, a hasn't we're it's but bad, been too it. on

change did in came guidance that the that it was I in something cost-wise didn't lowering quarter? you in something or was the the just for EBITDA, mean, shifted? back August, So, sequentially expect what there

No.

as we're number the P&L. we HSD year, know adds down other from -- think you I when just take through the the the taking number and for guidance, flows -- that HSD

So takedown. that's the

revenue coming So, about and if we EBITDA. look They're of the both at X%, for guide the is takedown HSD takedown. down on

that in the big… factor will coming That's through a the of really it's So, quarter. the less adds be

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

Two, if I can.

peer of increasing. manageable whether kind costs still we've about First, operators heard mixed commentary from if they're your fiber or are build

WOW!'s So, have an ROI when strong fiber what has initially as been? were planned? they as Can the experience build still

or ARPU like to then appears XQ suggest did math high-speed pretty if And a compared to internet the step-up right, I it looks revenue guide in XQ's second, last significant year. my

territories? operator is big ARPU? the that does of in to rate And a affecting any So, its reflect event being other a low-price strategy change WOW!'s or shift factors there in

to and I'll color. add start more then John out hand some it to off

bullish excited we with in greenfield what on about we've Headland, are ever with our also we're we're markets. the doing on what as fiber fiber And build, as talked doing and ouer So, Edge-Out. we Alabama, been

good So, those always in terms ROI, of our we it solid business feel prospects. as as the very case has. about looks And

hurricane the very sourcing not our we there. a the that markets have One have had Ian, rolling. very slight really because keep so thing with much Greenfield warehouse very impacted we that and to need managing just been reiterate can serve. we great have And our continued slowdown I strength we tightly, actually to want that the Hurricane We also materials the strategic buildis we on that getting in

some such should rely was of just restoration, on on, It that. their as we partners, power not that it our resources the company focus it's be. was obviously, So, the as

we there just very and as But to about still on was a So, good in track, first there. launch that. slight said, feel we are have very the delay quarter,

continue we tiers. customers largely ARPU take in growth speed the revenue, HSD higher forecast On really is that continually to because

take the our at well of So base our really new rate as We've tier, well especially that, is customers service, both our existing I with newest resonating with coming and pleased higher the that's think, been as gig X.X speeds. in customers.

ups extent increase customers for tier share fair lesser to is granted the speed existing the of We And tiers new and our of then higher base. speed promo for had promo and ARPU out a It's come roll-offs. the numbers. they

So, ARPU expectation is to increase.

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

to just, over is being Edge-Out, sort Obviously, of years, know -- years? talk seen the here, about the Greenfield and move-related we net longer-term guidance flat churn? low I environment but roughly to really be really giving economy big but about going legacy markets is of change Is any the the next few thinking So variable moving just the to the for sort this what's that you're -- net move not outside for well so look as X, this the adds should next X, just it for? needle X adds of

effectively crystal their customers. have We in an alternative we And Yes. tell a anticipate high-value, that, budgets, customers I you to have continued Well, is markets we a as reliable new connection. offer great that. our WOW! don't markets. doing Dan, our especially We still and can for markets, within a legacy as are and I for fast customers offering legacy Edge-Out our as very looking well those but all grow compete that the ball of penetration at and

ones the not still but quarter in projections very the for fourth had plans that to we're and projections the good At for this next we're not that time, future. about place, we've beyond, giving the are feel extrapolating or year we

line that update customers? first kind XXXX the to half first on an give of a sorry, time of Greenfield just -- on Is you still timeline us maybe Can your ? the

saying quarter. actually We're first

So, 'XX. first quarter

Your question Brandon from KeyBanc. of is the next with line Nispel

could. little Hopefully maybe if was it's confident you on add voluntary get loss. lower finer not Teresa, questions, can more competitive. quantify us bit versus adds. Two a maybe churn, involuntary bit point I the that I you How put implied is help gross of could quarter little it us versus net much hoping a fourth help to

quarter, should similar up. low the others, even the to EBITDA revenue step meaningful rate hard and fourth the guide the in? you John, get for It's where with run this on promotional for we then end the and And the of HSD question is is coming pretty expenses a quantify could at. quarter to Maybe see guide ARPU as business

I'll the then to turn and first over John. it take

hardship. So, out, in this put really the in financial needed is a terms couple we numbers churn onetime of wave we're the those kind additional fourth we loss like we that to throughout attributing are guidance things the quarter that are happening. seeing, of we that There anticipating assistance some said, of who

So, of is what point. the in your seeing we're bulk through voluntary coming to

talk want did comments the on And some then, John, you to -- revenue the and about EBITDA? of

Yes.

again, So, Talked higher. the and ARPU normal people climb to due tier should little into speed just stuff, ups a buying Brandon, promotional roll-offs. the -- continue HSD so before to about bit

customers it's hit revenue. take with a side we is, them working a out, other to revenue. The these some It's were of we of when negative

we one shot a that then that see it's So, won't and anymore. --

then save So, work be people hitting and of them. revenue it's with hit of going a were forward. sort we a won't to We these revenue trying promotion. kind We to

rev the back jump on So, a line. nice It's accounting we'll stuff. get just HSD big

RBC next Maral is Your with Markets. the line of question from Kutgun Capital

you And retention the existing as to read-throughs any or have the are seen expect WOW! Patrick forward share Can with metrics an your with going wireless offerings available? from do broadband just you you where trends is broadband mobile Kutgun. these gone selling conversations share and bundled the strategy last, you've with offers? offers? result there of when how to a position Jackson are the in other go-to-market to customers your and on update markets your subscribers, for see and How increase opportunity converged sees on success This

to kind of our markets many have have on our this we've quarter it in So, of the really of we where channels. -- launched all is first really sales across and wireless, started

that mobile, number, still success had opportunity a buying we're say would to sell And So, have at And very we our the as with all both had very products customers of with the haven't That's we I one with new. well product we're as the also but of small experimenting the existing previously. initial have stages. customers those.

in a an still what see enough the any we us too mobile is comparison. service with I'd will be the that because long of impacts this really been to say to right customers with now, to on the of days believe just kind in impact we're But that haven't bundle. churn, see early stickiness

And wireless think my pairing also sense. know, that you is As the background industry. is a in makes I this

we are from offerings. So, that and to do in very rapidly. we as we much we this, experimenting feedback wanting get with how so the those pleased very at But we still bundles of launch went were so very and we look from far, inception are stages to how really customers, initial do our those good,

months, part launch it the ability was about X, got and I running, our which strength think which and products, agility shows new think is we've just and you our to up this of I that really things quickly. -- can and is we posted WOW! benefits very very to the the of competitor we plan further. some of as go we're But as do keep of you a new X agile

Company. the of Your Benchmark Matthew next question from is Harrigan with line

speeds? terms answered, possibly good broadband. the my faster just could update people enhance really the moving got pretty could appeal curious was were pricing okay of it And of what questions Most I a curious on also, power to of a for do moving and like if feels you in enrichment? us I but forward, to further was give you trends you've

a growth of 'XX some huge in their has And it over back. We, in So, increase and know, never to gone really that 'XX, as XXXX saw see trends, but usage you then continue customers has in leap terms we the usage. pandemic slowed usage. in back

still at higher for that we usage customers. So, amount are

that and tiers. we're is the one And speed things seeing customers wanting to take higher of higher

a sign shows customers for So, it more use I very strength going keeps our the our that more. think and to and strength positive it just industry, also that's as us, network strength of for from

as to Probably increasing a usage, customers see We with that. for applications, little is increasing well continue bit upload on even more download. well both of their as and upload all we're different equipped

So, we're and excited see those continue to of trends enjoy and customers the that reliability network. glad our speed to

future terms how of packaging I And higher we to promotions speeds. power our tiers, might higher In do we in pricing enhancements, to them. or benefits think our what and there customers as definitely you're are is think that I talking about up move up customers our that, to move to

And is XXX of that meg are reasons the taking above. more one think and customers I and more so, that

models. table question, leave try on we our investors have sure we don't to making that been Does our build to do and our So, your think And money I successful pricing answer Matt? the that we either. into for listening customers that in

And some I a speeds, other along? people building As you're assume okay future, emphasizing WiFi and if -- the I assume it it's higher new to push the raw of in the also blocks advanced complement to

Definitely. Absolutely.

for our enhance continue services other and and on Our number to security customers. add-on things experience the -- home we and to the WiFi always have whole our of

some is technologies. the And that just newer advantage such all our a day of once the think long home there other that services, ours, reliability throughout over I of just key again, that's and through

questions. to no are for time, any will turn there Teresa At over I further the comments. closing now this call

Thank you.

balance again, key, that and The that's strategy absolutely reiterate by ability we're for the have much our unique really we're in for a execute to our in. confidence leverage operating really our profile, strength unaffected growth that's current to Just our future, challenging growth we and is increasing and environment. in so position of sheet investing the without

I'm buyback conviction highlights our that pleased this our authorization. stock undervalued. that belief the in we've so announced strategy our and is really It

your joining continued today. support Have and calling us for WOW!. so much interest you day. great thank of So, and for Thanks a in

Thank joining you today's call. conference. for does This today's conclude

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