OTEL - Earnings call transcript Q4 2019

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Operator

Good day and welcome to the Otelco’s Fourth Quarter 2019 Earnings Conference Call. Today’s conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Ms. Drew Anderson. Please go ahead, ma’am.

Drew Anderson

to for conference December the welcome the to XX, and results company’s fourth you the call Otelco review XXXX. Thank quarter ended Executive Chief call and the today be Clark, Conducting will Curtis Officer. Financial Chief Garner, Richard Officer

risks, Before Such that made to be we uncertainties known forward-looking not of results statements during note unknown facts current company unknown are results statements that historical of results cause that historical could involve start, or expressed offer call by constitute cautionary me such statements let future the actual different and this forward-looking forward-looking the materially and or statements. other factors implied any the from the from or statements.

to consider labeled herein with terms forward-looking to other company’s intends, plans from forward-looking. filings belief, The risks the uncertain statements and anticipates, statements uncertainties expects, explicitly statements time-to-time believes, that and addition to similar and risks also which described the be urged Commission. Exchange terms are and contained subject generally to the Securities in are or such with In are describe uncertainties, readers

With appointed that of Executive now stated, ahead. go on over the year. Otelco this X Please Chief January of Officer who Clark I to Richard call will was turn

Richard Clark

Otelco’s will highlights other performance It will Curtis of and you, call. quarter’s fourth after on affecting quarter update activities. review host I to fourth was XXXX After issues results review questions. everyone’s and appreciate Good Thank results that, our Drew. and everyone our morning. today we then you investor to I good on our key take the financial business, opportunity

fourth the voice of revenues industry. the the both and company positive infrastructure, was total history $X.X constructing residential the along the our million in in speed showed improvement for on at for the are In meeting churn the results in million metrics territories invested night, spent fourth last Our company, there But And glanced investment with reflect the customer in the our in network continue largest future. it to the declined single investment bringing customers. our if signs largest some quarter, trends you ACAM quarter’s $X making $XX.X million, to our information impacting Access for quarter the XX-K annual last fiber half the an fall our in obligations. the performance $X.X year the million XXXX. business history. customer Approximately of our and

have While growth, VDSL increased to to to the to has churn fiber responding to our of provide deployment or through additional our flat to speed network. go been be we ways XX% of platform still our the entire are data able clearly show customers approximately conversion and for Lightwave

in complete the our fall, offering rollout Massachusetts, our and coming Vermont main year, and complete VDSL the started last cable During to fiber X.X, certain Virginia convert in the DOCSIS markets. we we builds will Alabama of West parts

for million having the the access a decrease $XX.X of By revenue EBITDA of with premises the for XX% speeds. quarter quarter quarter voice the customers, of XXXX. relatively XX.X% of million with previous $XX.X the results of fourth quarter $X revenue These Operating for $X.X XXXX. X% compared revenue and are ago. reduction trends million flat second X.X% the year approximately from quarter, to to fourth XXXX. the decreased XXXX and expenses million income least the improved access the with third to million services data XXXX, were million in to $XX.X quarter consistent the compared XXXX, the from fourth XXXX reflecting decreased reported a fourth with a the we gigabit $XX.X in the XX% Net of of for million current $XX.X revenue. in get XXXX speed, with in with for in XX Mbps, quarters million was compared quarter at capability to have $XX.X $X the passed, period to first million, expect speeds fourth quarter having end in Consolidated year of with $X.X million Total prior

these as We trends expect that XXXX. we will through move forward continue

sparsely services During including have on speed throughout our enhancement the and previous will strategy our network. significant to fiber-to-the-node fiber-based early sense. XXXX the strategy for The execute Fiber-to-the-prem around in more we expansion where In northern XXX in in capacity install focusing makes of miles customers, of be in July with the announced plans focus fourth in quarter, fiber business, data increase by vehicle investment the we in being the continued areas. territory on to increasing discussed and our employed it the calls Lightwave part populated Alabama primary Alabama. Arab, to Otelco’s economic additional we XXXX, data

and locations, capability. to engineered Lightwave is and Arab internet provides planned in underway XXX installed online All coming month. the additional with of to this marketing X,XXX has speed gigabit been locations Fiber-to-the-premise fiber up

in service on copper for network. fiber on service the new of and signed upgraded XXX newly released or customers were already our customers customers footprint Otelco majority being customers XXXX, these A up In the XXX of fiber. total Arab serviced their sizable existing

coax to hybrid also territory the to and support work Alabama locations the where service to all in Alabama, higher ongoing our England is Otelco work Missouri DOSIS part New speed cable in the southern provider, Alabama equipment and around has deployed addition, of X.X. Oneonta, sites. In upgrade the upgrade is underway with network preliminary been fiber VDSL the In to

gain summer fiber-to-the-prem to similar those speeds also of that our to will all of the network. available expect gigabit XXXX, access customers over speeds internet cable over We

The of total transport fiber. company territories, network. distribution fiber an locations now in X,XXX and During miles discrete XXXX of fiber-to-the-prem and in Otelco’s Otelco Lightwave over service fiber of its miles from has network miles passes added of over a X,XXX January XXXX, inside its increased XX% of XXXX. on XX,XXX of XXX distribution

reminder, of were which used the fiber our is not or connectivity to contiguous. territory majority serve territory, a customers of our our within our between in providing As portions

offering fiber-to-the-prem communities now network several as We the Maine in gigabit are Alabama. as well in speeds of Oneonta, fiber-to-the-prem in our

service to gigabit network will probably that not speed company’s in fiber-to-the-prem requirements year. provide for coming customers years future to increase later our Lightwave continue it likely throughout for is we highly redesigning services expanded most this today, necessary requirements. be is While and the these gigabit will are

alternative continue in the standard XXXX, to model American technology plans on or federal to During meet to VDSL platform revised company exceed connect requirements. its a invest

to the of of requirements by the for for locations the hub reporting and by February. of We XXXX. was territory March the our Fiber-to-the-premise filing requiring and broadband the in finished achieved were capability make upgrade, deliver the that locations the have exceeded Alabama of We both XXXX speeds. and XXXX deadline reports, end ACAM Maine, ACAM create end available data territories Mbps the to XX% number requirement in to XX.X The due goal Missouri which the cable we in speeds. gigabit increased

us territories allows the XX the territory cases least some offer at VDS the end to XXXX customers. megabits we XX% XX% projected to of megabits to of of of by XX While at the end XXXX many of and be and served to in speeds

increase and to deliver current our we the speed customer out enhancements build reduce the and can are customer speeds churn. these to network base network, worked meet to we While the maximum to make providing have requirements the better we

ramp as with throughout number we and these pleased of last are more worked speed as initiatives a have year our We to other employees customers. get available broadband hard up our progress the our execute to on to

our continue experience customers. on will we focus speeds and the customer adding improving data ahead, Looking enhancing new

Services Looking X.X% This a at customers quarter loss to these the in decline for XXXX. fourth quarter of of the in X.X% of in compares fourth quarters total X.X% decline of X.X% XXXX of X.X%, with customer almost a XXXX. third and in first quarter. XXXX. were third, services quarter the over at the for customers second some flat the and served X.XX% period for of customer X.X% decreased respectively X% Data X.X% end and metrics fourth and decreased the from a XXXX, provided decrease

churn favor traditional experience with to and services voice cord customers in the continue mobile cut will phones. phones of We as

summarize the data our now and market new impact represents fourth the territories of through enhance speeds combined our customers XX% strategy of improve with our data deployment building combined will XXXX. customers of affected and these customer approximately of VDSL which experience Curtis available on companies. will Otelco net effort the into of speed increasing believe product and of to fiber base family is financial our quarter Our the that by portions offerings technology concerted continued in and for the expected We positive enhancements of improve future, will our the in have to subset bring back results. efforts our speeds customer end experience the to churn

Curtis Garner

Richard. you, press your the appreciate your we for items We several I already number highlight and today. fourth includes everybody joining quarter and a few Richard the touched quarter take release metrics us areas other on financial of review. results fourth can questions. Thank a then will for

comparison managed decreased while quarter. revenue X.X%, the video were was access quarter $X.X every million quarter network services internet X.X% X.X%, million, Local and is otherwise, Total last from year. revenue declined $XX.X security X.X%, year’s previous revenues the services services increased same in period X.X% X.X%, fourth revenue against fourth for noted up revenue fourth from the the last declined Unless down year. and decreased transport

in quarter XXXX to Net $X.X last previous from for other to million XXXX was Moving the the million in and fewer income capital million associated services expenses that period period in we some share quarter decreased the fourth more from and Consolidated reflecting fourth a $X.X quarter Basic in was quarter quarter in $X.X lower decreased our revenue. compared revenue. higher of primarily year reflecting XX% enhancing driven with share fourth income as income revenue. the SG&A decreased of to the of in expenditures. interest same in increased change the lower on to million to per result for to cost XX.X% the the to same Operating our the by hand fourth in the compared primarily X.X%, $X.X $X.XX both change in million compared driven was had fourth down operating year. increase driven the again quarter expense Depreciation $X network. the $X.XX Interest assets period expenditures X.X%, fourth decrease increased prior XXXX principal rates. employee by per the for capital $X employees million for for X.X%, time of XXXX was by compared EBITDA net year

end the of Our balance sheet of end at reflects cash of compared XXXX. million at the $X.X $X.X to XXXX million

invested million operational noted company Richard improving XXXX capabilities its million reducing its at Total million. by increased $XXX.X during end loan As at network of XXXX, to $X.X the $XXX.X and million $XX.X the from XXXX. assets of by end the in balance

available business. X-K. also more of margin on additional at use lender Our of on although it on plans a amended The EBITDA of the loan credit X, our ratio rather higher March company’s rate will to XXXX increase our leverage network cash decline of improve X.X% Form from level is on business make generated agreement historical known was may reflect the LIBOR debt to X.XX% and the indebtedness. continue increase. XXXX than filed the current to to our additional The was the our amendment end consolidated bank offset the website than Otelco XXXX the as to prepayments rate investment X.XX reflecting for in the on as in from interest the

for that we you quarter. I time. highlights questions investors direction, from to this the shift Kevin, think can the our covers provide at taking if

Operator

now Instructions] [Operator in in the questions We at you. queue are this There the Thank queue. questions some time. no have

question comes & of Sochet go Ira from Please first Our Company. Sochet ahead.

Ira Sochet

to there. speaker you Hi am I going off get somehow.

Curtis Garner

you? are How Ira. Hey,

Ira Sochet

am I thank have I say no fine. you. and to good job questions. want I

Curtis Garner

mute. Ira. on Hey, you Richard maybe Thanks,

Richard Clark

apologize. Ira. Thank I am. I you,

Ira Sochet

Bye.

Operator

Bender question comes Please from ahead. go next DPB David Capital. Our of

David Bender

Have question. or company entirety the alternatives guys either parts a considered of at exploring guys. strategic selling off you the company? Hi had I just all of the

Richard Clark

value. As mean management I are The the always shareholder maximize – board you looking as the for are we are the public company ways a board company always and and aware, lost trying we now, as that customers broadband win a so years us, investment back. can our customers over speeds that Right it. the with enhance we have stay we the increasing continued to view to

David Bender

Okay.

Operator

question comes from Our ahead. Please Tim Burgan. next go

Tim Burgan

roughly Hi flat. were Question have internet, guys. we are last the revenues million invested on year, so $XX.X adjustment I $XXX,XXX internet think

reached we’ve X,XXX in Given the premises, trends customers positive? more historical at that do uptake point think on you and what goes

Richard Clark

project future. is to the It practice not our

of the only copper end only is using speeds. XX% the to have of recognize will network few increase of still the derivative months with we network copper network, it or have our rest VDSL XX% to of next fiber, a You by a network our

the So, you the fiber are non-fiber network. balance always part of against having to our

Tim Burgan

an its long network would rough Okay. of before And know the it investment think do how whole I was fiber, be scale? you

Richard Clark

of have significant Well, miles we and and miles network we copper I thousand take investment. capital fiber fiber distribution apologize. time will It a have of some – X,XXX a copper

Tim Burgan

make guess I considering capital sufficient decline, Otelco’s is telephone And that the follow-up an revenues Great. that continue to question then to the to such investment?

Richard Clark

our cash from flow. think have capitals I the free we available

X years. have a We of great over it to deal X last invested the

available. to invest We will continue what’s

Tim Burgan

Okay, thank you.

Operator

would to the like host for hand questions, additional or As to your I there any no closing back are call further remarks.

Richard Clark

this always our the and plan welcome you you. We informed we Thank questions of you your developments on We us appreciate keeping joining business. morning. regarding

Operator

Ladies call. conference concludes that your and Thank gentlemen, participation. today’s for you

You now disconnect. may

Otelco (OTEL) 10 Mar 202019 Q4 Earnings call transcript