WideOpenWest (WOW) 13 Mar 242023 Q4 Earnings call transcript

Thanks for standing by, and welcome to the WideOpenWest Fourth Quarter 2023 Earnings Call. I would now like to welcome Andrew Posen, Vice President, Head of Investor Relations to begin the call. Andrew, over to you.

Good morning, everyone, and thank you for joining our fourth quarter 2023 earnings call. With me today is Teresa Elder, WOW!'s Chief Executive Officer; and John Rego, WOW!'s Chief Financial Officer.

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

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

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

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

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

remarks. afternoon this presentation complement the prepared included our also have We to

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

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

we positive our our build are are to taking initiatives, subscriber indicators stabilize efforts response momentum legacy in continuing early expansion losses. to we market the in are to We in and markets seeing

for the year-over-year million of the steadily sequentially EBITDA third throughout year-over-year, of adjusted increased $XX.X of and a year. results decreased fourth which X.X% revenue quarter data quarter high-speed but up record million, Our $XXX.X X.X% margin include which increased EBITDA adjusted XX.X%, consecutive

high-speed For margin adjusted X.X% our EBITDA year, from X.X% XX.X%. with the EBITDA adjusted The $XXX.X new markets our by the in accelerated increased throughout to agile. XX,XXX homes in new full in pace data last $XXX.X an and million of a culminating passed greenfield XX,XXX to greenfield total construction year passed in of markets million year, while agile homes XX,XXX declined revenue and the including our of

quarter most history. We as X of throughout quarterly in fourth our our the homes fact, the XX-year fourth many passed nearly robust quarter as year. of was the the expansion In network alone quarters first in our did we

greenfield continued added of through part team XXXX I our of U.S. over this extremely I'm our proud as more strategy. one driving is growth year, homes markets. WOW!. that far predominantly momentum early our Our is of our who in our expansion effort not only the XX,XXX am as of quality we so expansion initiatives to recognizes which the has have central the

provider for of overall. wireless service continue of prioritize of subscriber XX and cable Internet fastest fourth cable, ranked and News upload line, will types offering a to we team, services, and providers is for and this in providers XXXX. Out marketplace. This WOW! our first for Internet U.S., customer digital all fiber, cable innovation satisfaction fixed moment the Internet XG second best service WOW!, across and a competitive list named speeds, World Home proud the just including best satellite, Report of Internet

have but expectations the Our from challenges. fixed threats fourth churn activity, these our Low we we as continued quarter tiers in that line address last and move HSD first a XX,XXX subscriber higher in during as on losses call challenging. to competitive to the result quarter were of environment the speed the macro and that several fourth be said improve lower took of carried the steps begun ongoing to wireless quarter into with

for a speed customers at existing surprise boost to customers. meg, minimum we their Specifically, a cost. broadband them as to in giving the XXX boost our no gave We well XXX increased meg speed surprise additional

Second, surprise-free a has we free includes no simplified well introduced approach extremely been data contracts. or which received. lock modem, option, pricing the price caps This

promotions. strengthen tiers. right-hand $XX.XX. chart buying extensions of additional lower ARPU confidence above. on in the lower Third, chart our across especially steps success the to markets, has lower of slide soft these shows offered the slide a footprint. The new reaching the on limit given the shift customers the growth customers our for during buy help high our in and shows The proportion Edge-Outs numbers not the off and of as quarter short-term markets increase XXX side in the continue subscriber progress are This create in on legacy making new strategically did we meg a new to quadrant to the the The landing HSD greenfield legacy rolling us early and of small we our majority of ARPU HSD in a customers left

HSD expect ARPU increase in We will further XXXX.

the ease financials. to growth way their of taking of subscriber will the Although work we're address the likely steps as churn our through rate impact

of quarter, HSD end XXX,XXX have now the we than of the more As subscribers. fourth

As transition expected, during video our the TV. will further traditional to continue we YouTube quarter, business as which declined

we video results our TV a much partnership also provides streaming, will year. on this this customers capitalize value mentioned, better content As provide fantastic more which to shift and to a at great to believe opportunity YouTube contribute the to

our greenfield early commitment and rates conviction and expansion strong our markets strategy. the our to positive in penetration reception Our remain reinforces

we homes XXXX in because significantly penetration quarter has rates under continue quarter. greenfield Edge-Out late the just vintage in rate of XXXX Penetration Our number the rates strong the also vintages XX%, increased our a of markets XX.X% XX.X%, decreased in while the penetration to of report and and respectively. XX% to fourth XXXX passed

extremely John, reiterate at to penetration than cohorts months the the averaging activation. To strong the the key rates, outset conclude, points X XX% want demonstrating call handing this I of after I made that more before first call. However, are the within to

continue more in XX homes passing we expansion First, XX,XXX Edge-Out this December new and than and invite our markets XX,XXX through both in markets, homes to great progress greenfield so year. far

to the Second, the we stabilize we took losses positive during the improvements and our quarter. lastly, quarter footprint to to our steps are our TV And expectations first in YouTube continue legacy reception evident offering. see in for

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

same offset HSD impact of the the decreased X.X% same $XXX.X incremental X.X% last million rate year-over-year, higher the revenue quarter, margin revenue, from $XX.X which margin new Thanks, the adjusted by the reported period to Teresa. XX.X% grow to last with in in increased revenue. The by The last this telephony in drop to XX% respectively, proportionate tiers. increases and EBITDA contribution record our the period we reflecting in to X.X% revenue total increased and EBITDA year. XX% X.X% more was fourth by year million. from HSD customers million In in higher-margin growth year revenue, which the driven of increased well video existing sequentially a as quarter, revenue, HSD total period the a driven in than in HSD respective resulting to same and revenue as continued up speed Adjusted upgrading $XXX.X from of decline and a increase of XX.X%, year-over-year, increase

for our cost progress update Now a on structure alignment.

end by of the hit be pace our $XX.X We target XXXX. to continue million of on to

As $XX.X of the fourth cost equate quarter, savings of to reduction we the million identified for our which next over years. million, the $XX.X XX% total few approximately represents

In the corporate on of is ended last administrative company, outstanding We realizing total also despite and spend leverage addition higher and quarter capital savings across significant million, with million $XX.X $XX.X which ratio continue We of be inflationary up X.Xx. costs progress million million debt environment. reported as to made total cash total made our predominantly year. we further $XX.X of headcount with in these the measures, our $XXX.X at we'll from to areas. we manage diligent and reductions, the We

Carolina. year. Expansion as period Our core in was future quarter invest our in for on Edge-Outs from million the homes efficiency increased Florida million fiber the CapEx Greenville Central the year to the CapEx quarter, $X.X and $X.X XX.X% then continued and on additional million of fourth bringing the we greenfields, South an In same County, to and last million we growth, XX.X% fourth on $XX.X $XX.X services. business spent

CapEx, we as on entirely define expansion adjusted EBITDA in less to million flow, adjusted quarter, almost Our the negative free greenfields. spend predominantly fourth higher driven $X.X decreased by which unlevered cash

is down year, we free reported cash unlevered $X.X full last million the in year. from significantly which For adjusted flow,

on a our markets. flow passing in cash market increase We invested the markets. investment are in to focused several million with the XXXX, spend homes, predominantly spent last steps million, new these support year, undertaking portion year new $XXX to upfront expansion to entrance leveraging in on our free approximately plan spend $XX we to XXXX. In the we This significant

immediately it be managing X.X that within benefit to whether we targeted investment or our is addition areas will In network will strategically DOCSIS as upgrades. from in spending infrastructure expansion in of spend, our particularly support upgrading to continue our we fiber-to-the-home identify

position believe should us which XXXX. of us executed put help year. efforts the generating free of also in a this manage back expense $XXX million our We on our will cash end debt, interest long-term by we flow in hedges annual Combined, these of

like questions, first the we expectations call for before our I'd provide quarter. Finally, to open the for

to challenges we in indications see we comments As from throughout her morning, Teresa positive seeing will indicated in we further markets, the taking we're our address the year. some steps believe the that legacy are improvements this and

XXX, be first HSD negative quarter. revenue $XXX and $XXX We significant the to be from million. between X,XXX negative quarter, believe fourth between HSD will subscribers the we improvement million For expect and a

now questions. the between first We up be and to million and quarter million we'd be $XX total to between for million adjusted for million. And revenue open to expect $XXX the $XX EBITDA and line like $XXX

question line comes UBS. Schoell [Operator of the Chris from with Instructions] Your first

steps how us to fixed you going there, ACP to broadband you're mitigating us taking and But wireless. what's to that XQ? through with an you other program, can think impact guided your funding in results I highlighted in XQ. And thinking ACP here you churn maybe given expect repeat to does on you're about the You mitigate help of don't XQ that improved exposure can you the size lapse? subscriber help contributed trajectory recognize factors the the

of we started. the coming call, were was I Thanks, fourth from in fourth telling This quarter to roll-offs large unusual off last get our steps, repeat go as And certainly and Chris. so that, -- I'll We've end believe of increase, in any customers. we were said also the because quarter. is of rate seeing promo was and my just come what a we coming we out we -- and really what outlined in improvement fourth not saw ahead see will the Teresa. quarter, the remarks, I you quarter. taken Fourth and first do had address significant significant the as we

So delight attention from new both roll-off those our for really focused done a that soft for as existing as speed of we that the really well did pricing have base. surprise landing existing steps, customers, we and and a as again, great that on is customers simplified the promo our upgrades tiers are attracting

are those what customers want. think hit and traction All tremendous spot of the of sweet really I really getting

is what think fees know they want that tiers if for simplified a pricing, them do pricing, and significant really the with great, any of We we On spot future. the customers there to want, hit consistency sweet I kind lock giving not option an and pricing, a price the with did the having we that surprised research. and

So different taken some I others are approach, than responding a think, and customers have well. very

future. are results the watching certainly feel second We believe program. and for on for the yes, was that that and have of as customers WOW! in ends. this think your program really we XX,XXX the the we'll that. about were and we've prior XX% closely to up-tier year continue are good very QX XX% to we we about have customers ACP our of services. the the some feel about but on. I news existing been in participants those that, services opted in when of use and enrolling with about to question coming currently really who greenfield homes ACP rest see have So to preparing the WOW! many higher to And the ACP. what certainty ACP And of happens

offer to come the implemented won't of exactly we'll terms the hard of see revenue hit happen, it's going but subscriber So but pricing should continue side, hasn't okay since in that be that say to hopefully, more we what's to we attractive to from and any side, yet. much that feel we so been

There's fixed That's very that maybe today then can a remind could telco expect do been if overlap wireless, this of I you just helpful. you your but footprint us lot and in X follow-up. fiber evolve And just year? to where focus on is how

Yes.

telco bit. still think, the our have continued It's some I not It's We largest, to grown have compared one of peers. a overlap. to

generally, come I to footprint. our beneficial is where they a we with the our usually fiber markets, good get alternative provider to think in And are most in financially given they incumbent can not deployed in return. it's areas know another the an that in additional

extremely compete that. we well So with

day. fiber with And every is so good about do where but it I feel we ability that to compete our

of not a concern huge So ours.

of the with Raymond Frank Our next comes question Louthan James. from line

Great.

build there give and relatively to us So color where think some Can base the you legacy point shift? forward? builds market. you how expected of going still in we those a continue your in year, the Last base larger on or you adds drive the And competitive new outside theory, adds. those there. issue the -- that I builds kind to is of overwhelming to is a erosion going should easy larger kind what here. be mean saw more your some in of lot that's markets builds Is that's

Frank, it. understand I me you'll I the I correct if understand So think quite but don't I question, know

year, things builds months. everything great work, pace the hub talking warehouses, X the that side, feel new all the we're many on of new The and markets. initial getting extremely Last the So we quickly, markets, the getting construction. really strong, the construction, be reception about driving very XX% Those hubs, penetration all are of the the upfront place. it the focused we aspects those locations very inventory within attractive and the there, a of are of is we about -- the getting for lot in that

So well. cranking going extremely and now are that this year, really passed, homes is we

added add In legacy we some year we've done markets, additions that terms we last both that to and this Edge-Out the as of some year have well. continue

and kind we accelerate that we've those greenfield the As the are progress, as business to that on some and a I direct work turn the I side. we're around And well the that question, of doing making of in continuing really markets. outlined the momentum like both significant to losses legacy competition previous on the feel seen on side of certainly

I So did get of question, your the Frank? essence

that I base that's in bigger -- business. see and new issue builds. right a I but the point it changes a to going see to of to to the bigger where the this And are said what the direction? And of seems future point lot the drag to is you're in us legacy point like some is it you're like cross confidence you what that about seems the I one is overwhelming is -- can Well, what we that work money going still you hear the where so able spending At losses can and the forth, to losing start gives be mean the going stick? mean, there subscribers. And in

a point. great that's think I No, Yes.

and So we've we of greenfield. I mean, million course, added in in the have legacy X.X business, XX,XXX homes, another

are seeing then in growth scale in some first a the into the coming legacy business the significant. what expansion continued and the So reversal out quarter quarter But is greenfield. of of there of that the and the fourth and trends just the we're is we seeing certainly

to to do the see a think future we and starts where in the again. point I we So cross growing that start see business

point that next will Or is what be? that year? Is this year? that At

giving of not really year. for rest guidance the adds for net We're HSD the

that's to negative XXX For the last over first improved negative of also year. X,XXX first I quarter, quarter improvement, we've fourth believe, an over saying adds, quarter substantially the the

tactics all feeling our momentum many it out we new to the just so believe place, are good got far. but within grasp, we play strategies we and how see So have with things and about the is put to we'll in continue that we've

from comes Securities. Day question B. the of next Riley Our line Dan with

common pressures pretty know competitive people these reason where just you going. fixed when the with they're being or you the some of Can about terms I track low of the end? where out got most for larger increased you of that it that sort the -- out So bundles. in peers the and from went? mostly closely churn there to customers Is these it Was anything wireless talk call fourth the still response Was in wireless? quarter,

Yes. customers to is go The majority fixed of the wireless. places not our

I blip us was it because it talked much It think was brought we on that and for hadn't quarter radar. last previously. the it first up even time much about been a of the

our the So go WOW! customers kind all out every in or will to Charter, and of who Comcast biggest of competitors who majority are churn of day day.

And done a customers had time, because opportunity created off the increase rate we at of And so feel we bit rolling we an promo. of same last we some also, had the year. like

forward, some to, and that up customers. for of just competitiveness done we're simplified those So that really kinds addressing think, of certainty pricing, of it we've I and want They of some I the certainty shore going things. think really things

ahead just you to really quarter. data. And those to know, seen this course, are of So just quarter we too competitive quarter any we've anticipate able first want get metrics, a is challenger But step and don't that course, the the That's and provider. We pride DNA you of very, and giving that we always much respond to first let track brand, down of a competitive churn we dynamics. closely being in that to competitive. ourselves means being are of remain ourselves very always WOW!

in question I'll asked, I more directly. but ask maybe the think you was you that this started to get a little last just

So first for just adds, what expectations losses gross greenfield guidance legacy subscriber maybe for in your directionally you the adds quarter in about markets. what thinking can and for greenfield the -- then the talk net and for net you're

down really haven't broken it We Yes. way. that

first we're to significant have seeing side from are we of to in quarter well. first greenfield as the the we the for of order clearly, continues the and well. a kind quarter what improvement have But you in course, reversal But overall for, given So to business number. contribute quarter, that guiding of you fourth legacy

So we're We've lifting and more on passed the attract to go the boats got sides. both new on out customers. greenfield homes side

and just there. a I legacy So good that side, levels the we're And going that markets about customers getting both attracting the to getting also with salespeople. the reaction shoring of about with up was upgrades. top down into. And those on that WOW! our new our options, group new they're very has excited enjoyed delighting -- our They're existing churn, speed always the with feel new pricing customers back those

really, fronts. all So on think, I working

Harrigan from Matthew comes Benchmark. line question next the with Our of

those forward of your been great have of formation more how kind cautious moving I cetera, the You rates your penetration the how to these little modified as really et got not hurdle maybe my new for market think a function far of wireless fiber but Florida entry household on of ROI some T-Mo competitive at to your in But identified I'm mean mean doing not markets to all that. And were going reaction when much question. and getting little long be And new you've fixed least demographics your of for in look too do very having are demographic bit or I great you is be being all identifying bit But you happy NAV and competitive characteristics more gist a base your so given on markets evolve these and model may or and or winded, a good the with ROI less versus your you cohorts. markets? have the sorry, markets, at be over near time, new a intense, much intensity, while some that you've identifying the a areas or econometric sure they robust much you're you've as whether those apologize little that. areas just as rise for

Yes. Matthew. Thanks,

I you're think what I the of gist get saying.

the do new where markets, don't we the service There's fiber question have pricing. have dynamics. so home the key are components the pricing actually the a that attractive to Once again, simplified no do we are what bundling together we piecemeal. in But about competitive with the believe really So of I it. they some want, with to customers offering

doing all promotions. greenfield, markets So very opposed transparent out along now in in we low in when That we're really very very And has well research our with those that being learnings greenfield legacy we in very, took doing various our rolled started worked churn. markets. key what pricing. some And our to of as additional

selected and feel very markets we of really have lots good mouth. we rate growth and the word seeing for not good churn, So of penetration that the anything about

markets So be good. continue those to

so put good when that that about initial criteria in have an And those about that those does XXXX. very look of use? in it original model. The I think is how okay, had plan are back competition. original second we is What was other the a launched. at of feeling we new Investor sauce the compare selecting we markets at underground did a extremely not that to markets growth believe, metrics the your build, cost markets of different selected does many of although And some I or speed question business very business to homes, get that going. half market beating aerial, we and announced is and as like still homes passed, criteria proved feel how the And how the our response plan? new have the that versus to the to builds compare? the the already important for way itself we can the of at density of we look We of do ones we're are just we've has market in some ratio with and We've how retracting with early factor, kind criteria. size, also addition community a the we look it kind which city very is markets, we positive. the from pleased about, We out where we of in I think Day, secret criteria we the we're

So, so far, so good, and we to feel good wisely. choose about our ability

And the able build you clearly free feel limited to right to generation the new given continue finance cash now?

kinds and upfront to thousands add John guide hundreds the of a a of spent ones that? will -- what year, in did lot did of million. more of to these We we've for want of many markets, not Yes. anticipate really you out year of put John, homes, those greenfield Last we the we so lot for $XX costs just of far. work this a in we support upfront done And CapEx as terms

Yes.

So Matt, it's greenfield I year. mean, clearly CapEx dollars last for than less

building a However, all on of there. to up is of passed. a actually focused setup more purely out is homes the materials money And warehouse requires work, This building the adding getting less the lot year hub that the stuff. set upfront

which back was And to comfortable that XXXX. going pace actually we in Analyst on pretty feel Day, we pace. still on we'll on comfortable pretty be So stay we the feel we're set

spent. careful. we're just obviously, be matter We'll the dollars But watching everything. of it's a So where are

line the Brandon Markets. Nispel of from comes KeyBanc question final Our with Capital

But sort dollars towards think you to address the sounds perspective. like again. liquidity hoping John, It flow you bit, the more what a least at I on To from drew slowing like comes greenfields, second you you're looks you'll be could go faster half do quite it the cash do as was at options position. in the down that revolver of liquidity CapEx of the get some the down. do free just extent to year want And positive a you then have business? you

Yes.

plan flow the the to cash free is full So for year. be positive

So know. we're of things, different doing just a Brandon, you so lot

literally So when purely capital we taking are -- so that. expansion do down, can that's we discretionary, we and dollars the

lot in spent As I question, we just on of money and a work. of setup that was a said Matt's the lot XXXX,

homes. So actually on less we just spending can adding by focus money,

$XXX So that's kind about of debt. sure out million of it for X executed thing but we're hedges blurred on we multiple that call, We our doing. the on

some save cash as So that interest will it relates to expense. flow us

hard top at to We million OpEx that about also there several cutting company, done the call. another the we also on look the time of took the talk the the all referenced the more and We've cutting on of we that some $XX over hit next years.

our feel to purely the is we of outside And the do we're that we spending in a that. place can of thing bulk that So the important remember running businesses is discretionary.

core believe, we've some CapEx. terms rightsized, of greenfields, on on and hedges, kind dollars We've we So the OpEx of we'll the cutbacks of done dollars take a little spent in spent of bit company. of

this somewhat by be fairly flow So breakeven year. plan. positive we of the we'll a comfortable that back feel cash to to the That's end

remarks. call now would to for over Elder turn closing Teresa like to I the

and you, interest this us Thank for great day. thanks morning. We appreciate support right. and WOW!. much your continued a joining Have All so of

This concludes today's call.

may now You disconnect.