WideOpenWest (WOW) 4 May 232023 Q1 Earnings call transcript

Thank you for standing by. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest, Q1 2023 Earnings Conference Call. [Operator Instructions]

Thank you. today's Investor to Relations. hand President, Posen, now of Head will call Andrew over Vice I Please ahead, go sir.

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

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

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

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

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

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

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

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

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

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

expansion our we especially pleased on to results continue this execute strategy. with our quarter, am as I

Our balance strategy solid us foundation and drive a clean on XXXX our a asset with vision a enabled to which focus sheet, clear sale, built to growth.

results, in progress initiatives our As edge-out well South our expectations. quarter financial line in results all fiber-to-the-home and our were delivering in we as while Carolina, in first are our report Alabama, on as seeing Central greenfield that we Florida with significant

we continue Importantly, ratio. this leverage from a low cash to do while operations with very maintaining

the decreased revenue X%, in dropped which our XX% X% by increase the Telephony, In year and first total was than period declines revenue respectively. as and a data same from Video last more offset X% quarter, high-speed in

largely The adjusted X% EBITDA costs EBITDA $XX.X Florida decreased and Central with to expansion adjusted South million, Our associated XX.X%. Carolina. was reflecting our margin the upfront in

RGUs, total During HSD with our more drove than reduction quarter, strong. data be XXX,XXX. metrics also the Despite our XXX,XXX. to total we subscribers, high-speed the RGUs first bringing approximately in to reduction of RGUs, operating number The our continue lost in subscribers HSD in decline the ending HSD X,XXX a quarter

only. quarter, higher rate HSD our an approximately of For selling we XX% the customers or consecutive eleventh of maintained purchasing average

quarters, above past gig customers taking with XX% including higher approximately XXX are data new speed X.X service. in with consistent momentum buying Also our taking further customers meg, speeds

taking XX% X even of more gig gig including greenfield dynamic where our either an a meg speeds market X stronger above, services. of seeing in number or and our are We are new than XXX customers customers buying of

year-over-year believe in $XX.XX, reinforces and We continue and portion existing data a figure from rate the greenfields normalized in edge-outs demand higher our the was of last customers including effect network. as of to higher markets, confidence It fiber quarter's the for and ARPU strong our increase that to October. of speeds. also statistics HSD continue last introduced ARPU by speeds to quality new These markets. demonstrate as taking share will full and HSD our we customers continue to add our to we ability customers reliability see and in driven increase and superior new our faster the higher increased purchasing upgrade speeds, base to

strategy show expansion momentum, results positive and most our Our build continues recent especially vintages. to in

Our XXXX rate reported our in new Central early includes vintage, Florida, which penetration an XX.X%. market greenfield up

And vintage early edge-out with penetration the to XXXX of showing be The continues XX%. constant a particularly XX.X%. to staying rate XXXX increased penetration vintage rate with vintage XXXX its is rate edge-out penetration Our strong promise XX.X%. at

for confidence expansion in growth in our strategy engine business to our remains we markets an performance said further our new the those grow ability markets. As and of in before, had our supports quickly

spend next like on the an of expansion greenfield Now, I our couple update providing minutes to would initiatives.

XX.X% last have Central XXst, penetration we said fantastic making significant quarter, March passed progress homes and seen where Florida, in As three than in X,XXX less of of we're in months. we the market, a as rate achieving reception

this added our customer January I'm proud particularly progress with of driving we effort that considering first momentum. our fact, In on exceptional the team pleased and our XXth, of

the We the to adding passed pace of homes year. expect throughout increase significantly

where reliable, by out homes have phase progress underway providing with the of areas first several services the also bring commitment in we consumers construction service expect well network We future. in build in fiber is new XXXX. passed communities our Construction our in these in County, advancing to The new Florida communities. to markets Greenville state-of-the-art footprint South in represents to our near to to additional continued Central Carolina, begin XXX,XXX

remain cash from to of The We maintain low our all are excited fiber greenfield returns of our which operations, this markets profile. core the in are leverage our aspects importantly, with about doing initial edge-outs. we strategy And enables us strong. new and

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

a good start. Thanks, Teresa. XXXX off is to

ratio, fantastic further a data our puts to strong new moving to are high-speed leverage which great expansion in business into we We're seeing Construction plans. low Our a a is along results continues and execute markets. our initial grow. us at pace, maintaining position

respectively. XX.X% revenue period Video total in a quarter, the from reflecting same reduction in first a and data and revenue HSD increase quarter X.X% the the year to X.X% decreased and of a Telephony reflects as $XXX.X last revenue upgrading speed portion to of increase million, as rate existing The base a In customers high-speed tiers. on full higher new quarter's increase well and X.X% impact last in

our Adjusted EBITDA expansion as related this follow quarter. continue from the last XX.X% period coming to to well operating costs revenue business revenue to in inflation. million, a year on our upfront HSD, total greater year decreased this mix as expected towards proportion increased in spending driven higher to by X.X% later of with our from core shift higher revenue The same largely which initiatives $XX.X

is margin continues increased The video whilst the the to corresponding rate largely grow to decreased effect continued The year-over-year of increase by shift The the sequential reflect due year-over-year. to incremental points cost contribution our year. contribution X.X decline in the in increase programming increases, percentage which timing HSD sequentially, took January, customers favorable was same but March. period in last from applied to to base Incremental the margin effect only.

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

cost the new markets. pace to expansion hit tempered $XX.X we somewhat headcount end on reduction of shift as be our the has by to into pace continue of million been of to XXXX, although We target our

despite million, identified costs $XX.X the be represents which As first to on few equate as quarter, we we we'll the next million of inflationary environment. cost the made reduction diligent savings to total of manage $XX these savings, XX% years. tremendous approximately the and for We've progress our over realizing continue higher

outstanding of million We capital spend with X.X our total ended $XX.X leverage $XXX.X reported times. debt $XX.X million up million of last million, year. We with total the from quarter cash ratio and $XX.X at of total

fiber CapEx Central in $XX.X at and Carolina. Greenville, to invest we future Expansion CapEx growth the our remained continue core and to efficiency XX.X% the homes of Our South quarter. in million Florida as heavily first increased bring

In year. at the on greenfields million an edge-outs $X.X we million services. trend spent first Expansion continue quarter, additional business to on spend this $X.X CapEx level will on and on throughout the greenfields, million $XX.X

our our million XXXX. to EBITDA primarily share the spend higher CapEx, repurchase was by right results and QX flow, program the adjusted as QX million, side of less down This free $XX.X unlevered expansion at Looking adjusted for driven cash $X slide, which define in we predominantly from greenfields. XXXX decreased on

settled remainder our This remain does about This we morning, that way, infringement in XXXX $XX million, litigation our new the in a any our three expansion markets. May excited will on we for and progress next we million $XX in be paid impact that XX-Q years. paid over not lawsuit and patent disclosed including plans in the

and price million quarter, X.X authorization. through of repurchased approximately X.X we the shares for quarter, of million of an the end inception the shares program of first share. the we've at approximately per million Since $XX average $XX.XX totaling In $XX.X the repurchased million first $XX.X million

the open I'd we the questions, before finally, for call our provide and full second the And year. quarter outlook like for to

HSD second EBITDA expect million adjusted million For $XX total million to million. quarter, the revenue $XXX $XXX be to between to million between $XXX $XXX revenue and be we million, and and between and be $XX

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

are We're as momentum strong guidance year and in significant new we full base in seeing business maintaining progress markets. our our

adjusted $XXX and million year, to EBITDA million revenue related we million be $XXX million, reflecting investments full million, market the $XXX $XXX between $XXX million be between be HSD $XXX and to revenue total For and between expect to to and expansion. continued

We for HSD year. year passings add the throughout as and expect we RGUs between add the to fiber-to-the-home XX,XXX X,XXX more

quarter. closing, was In this solid another

and hold strong. our growth customers Our our and to conviction strategy, shareholders our our our commitment in prospects

up And questions. for open now, some we'd like to line the

[Operator Instructions].

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

you. Thank Great.

reported of been to last years, in in better you've and why down midpoint you for you to of that And positive is. can the you. or couple guidance. talk again you're the calling back will cause you've walk us through quarters, mode been build you kind homes half going going seeing in of inflection the the last QX. that's a just subscribers are year Thank hitting active what's us but subs? pretty couple the that the significant in down of Maybe in for results flat. the Can And get of to also subscribers through the So,

Yes, things. of a Frank. couple Thanks,

every had on past some that out starting homes built multiple always are dwelling fewer although, kind passed the than we all, overall of adjustments We both to there edge-outs in that greenfield flat did were maybe are where and planned. often. some units course, of that homes add of some First There done this originally areas. passed for quarter, the homes the cleanup so of looks were with

out. charts, of course, what of show But on passed. you're actually kind that been building. the why netted That's you all on homes did So that dynamic that seeing we we've

process, we go before the walkout build the the into deliver build of of the all have the things And, that passed. actually permitting activated terms homes in and and process you

start really So, there is machine time, that we're seeing ramp-up off. to take and the

quarter as something we we're our low look as experienced seeing in this So, in well churn at base that at WOW!. greenfield, we continues to be very as

I soft, legacy say, new conditions. would But am of quarter. on the with significant for connects, in the demand that net the to macroeconomic saw to just continues we loss The adds pleased compared fourth be side improvement the I

some of we homes in-force, tactics that build really back might as going look as legacy really with on half as improvement getting start the bit year, the we're the macroeconomic of to within those see off we're that's seeing the those trends with take that subscribers a be as just better. where to as at And, come as business well they as and new well the we well,

question, answer So your Frank? does that

turn seen on are going see business? the legacy the that the the confidence of you so what of far? explosion use the we gives that are tide tactics the to And going homes to coming that haven't you're growth So to sort new what in

last has seems Well, things And of pickup, we soft do our that that with our reliable the at of well so compete WOW! bit that to we the little of although we prices localize customers. resonate find extremely the a one what well are out have, we seeing the or softness could year that best offerings for with whole Yes. been with is some the strategies. connect at many the in just that we're really we're really economy, there, of can network fast, is seeing

the the second seen the quarter at upticks. first end we've of the bit and even little a some So, beginning very of quarter,

legacy seeing pleased So, with that in business. the

pops seen, you've of get where quickly. we penetration selected we as incredible the for good feel areas very And greenfield both and have about very we these that can edge-out

we Florida, started we're Alabama, Central XX.X%, we in mid-February. started XX.X% So example, seeing for that that The just penetration there in January Headland, XX. already

those reaction we're results, quick seeing are pleased we're So those very in that with and the markets.

buildings why our as driving So well have I a to of in confidence both that's ability as execute lot sales.

helpful. Okay. the competitive win? when are and that of -- you main winning factor? throwing -- a And the the it Great. what's Is there, is not customer that when factor sort look you in the at That's of what bundles would you competitors you sort don't cable you're wireless when say overarching

Yes. I win. would say head-to-head, we usually

And so it's fewer our a not continues is if to really the moves choosing or wireless be switch just non-factor perhaps and customer just fixed market. to in there's

with front close customer, have to rates. be So, I our are of opportunity we would in say the very if the successful we

All right, very much. you great. Thank

Thanks Frank.

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

questions. good the morning for guys, taking Yes, thanks

mentioned related little you where Maybe else more you OpEx wages? anything that dig in just higher inflation in perspective? seeing if from just inflation. operating costs Is business exactly hitting the there there inflation? you to an Is core in it just a John, could you're So that's

No, have got the little so one. average across we dramatic. bit national -- pricing increase, I that board. of every increases it's course, of A mean -- the every year, nothing year we merit

is think if relating more I the year last and last versus really we're things at cost spend this looking of greenfield. or versus year bigger upfront upfront we an to introduces EBITDA see, year OpEx

does campaign. not a market, of on So There's to the remember, that we a Blitzkrieg have capitalized stuff you do into end. do go get lot a you marketing front like

and that's we're pricing of raises. seeing. annual what So increases in Slight some

that's pressure. So the inflationary

you quarter. Okay. looks like it Thanks. in And revolver the then pulled on the

of of assuming just CapEx about the Just is talk settlement was ramping up. it I I'm part now. the litigation. know greenfield do the patent decision by influenced if to that don't it the is

to commentary pull there? amount really full is next the that And couple Just quarters? any the of plan over

When No, are My we levered. commitment we X.X debt, the below at we to it's reduction levered. times not. did to times I times again, in times X.X at mean -- big so X.X was first were us keep levered. X.X

the So, intention. not that's

greenfield. share got the the So which spending heavily things couple time. on on The of We're the $XX same authorized program, we've going we at repurchase million. Board a authorized doing

we're the almost $XX litigation. the So done. realize at were we you that And million you got the of end Sprint quarter,

to just up at that's if drawing intention it which -- did, to not the keep that its put is that So the think not I total, X.X to nothing I down on take but us times plan. levered,

it the over. All turn great. taking right, Thanks guys questions. I'll for

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

for Thanks the taking question. Great.

guide, on subscribers? the about in need you can On revenue, first ramp to need you expect half, math, versus bit question, million to X,XXX need more $XX half look EBITDA you HSD and versus at in versus running based you at of guide million your my $XX specifically on talk the to $XXX this $XXX rate HSD HSD minus Frank's HSD to a adds net quarterly quarter you X,XXX, up needs Following to million when quarterly that less than second to quarter get the revenue get And versus run million. the you're in a EBITDA obviously. a and get little

point expecting get low-end sort would bit just little in be and appreciate why I of terms this this more of you we shouldn't of guidance a guide of your how to year. the So, detail the

Yes.

homes new are There we are the built ramp. the is Frank speak. a massive So, homes as being --

were spent the towards today So initiative. greenfield think we if disclosed -- in $XX you about million QX

more back thousands you. report to into the homes pace, there So, be as sell to quarter just tens that think next of of we will of at

and maybe sell large as are from rates looked one that did those higher there factors a penetration at ability initiative built into homes at, very the player with homes we service we the The a the seen. de-minimis when was the player handpicking where coming very, good new very of price. a but were that principal to were are competition remember, small very markets and providing quickly myriad is into we've greenfield factors And whole

with hit markets markets our feel we the So, what seen in built and we're on based going those numbers. greenfield comfortable really in fiber to edge-out with we've that particularly

So what the half you're what back yes, you're that's big and see going modeled we a think I happen of to to that's going right, and year, have is sure. for

talking the talking adds? John, of edge-out back looks we to can core or terms I about up XX,XXX about or When like and continues the are address tens greenfield of follow on just reported additions numbers, say homes, just when business are we XX,XXX you we that? mean, lose can thousands greenfield you I XX,XXX? new from And then subscribers. of business HSD net it the out in core XX,XXX,

when you So color provide turn will as that well? can on some Thanks.

- think I Yes,

I into then a let can we just feel team tag little, - -- it. Maybe me jump in John, and

the I to homes starting second So, quarter, think to get machine the those we're deliver in passed. really rolling

that cumulatively, be ramps for And XX,XXX -- So, we I second at to quarter. that close think could it from there. really then, mark

mind, multiple be markets, in working one will just in delivering not homes we Keep passed.

with So, think is significant, for ramp will that, and of them the I the you the see that following all subscribers. course, penetration year

feel we good about So that.

also within there lot with pleased our progress with and of doing said, offerings. a making are legacy markets that the that a With we've we number been

getting terms a churn continue has while very low in it ARPU have we're more and in So, efficient very markets, in legacy grow doing at we just compete local basis. everything and of continued to the to effectively

from the I'd the seeing But going these customers. growth, just where markets from come say, reception of new clearly, of is to upside great most really we're

great. the Okay, questions. Thanks taking for

closing Teresa hand now back call will over I remarks. Elder you. any to today's for Thank

appreciate thank and interest much great continued Have WOW!. and Thank a day. all joining support for I you so of and us, your you,

today's joining. This you concludes Thank call. for

You now your disconnect lines. may