CNSL - Earnings call transcript Q3 2018 | Consolidated Communications Holdings, Inc.

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Operator

Good morning, Ladies and gentlemen, and welcome to the Consolidated Communications Holdings Inc.

Third Quarter 2018 Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to Hood, conference of Treasurer like host to Investor now Lisa Miss and would turn over the your Relations. I Vice President

begin may your You conference.

Lisa Hood

today We Thank call. you morning, and Communications’ everyone. you, joining quarter good us for earnings Consolidated third appreciate

financial include risks in that our website. for statements call safe today which about of will are press filings. future open Steve our expected Executive and measures. President future Chief Bob will A we Consolidated's discussion harbor uncertainties. with me Today's contained forward-looking events the prepared factors Chief to SEC, certain and remarks, filings Financial Udell, in subject questions. the is available Childers, may non-GAAP the Officer; and the our Officer. discussions financial On Today's Please affect results results are and provisions up on discussion review and include that are and call release in After our with SEC

Our been posted reconciliations Investor call Bob at to our turn the earnings With I release of our will Udell. consolidated.com. includes measures these to that, of the has GAAP Relations website equivalent. It over section nearest on

Bob Udell

joining Thanks everyone. thank Lisa, Consolidated And and call. Communications’ you good quarter for third morning

and quarter pleased third business has Our performed well results. I'm with our

a increase doing an the than data We've a and and in we're I'll This traditional have then in X% our First, we Ethernet before commercial solutions markets. what XXX,XXX markets. connections well as based selling carrier commercial requiring this. sales CFO go our regionally, integration known a England all contributing us year-over-year we on do update XX.X% effective explain the have circuits communications year-over-year committee update in this we services. largest enabled the we X% our And to on revenues where requiring CTO. in catalyst fiber of migrate sales grown and process capital Within as and growth. Northern and on New let how and combined. Metro provide voice an transport synergies. creates very process are channels, our [CCI and to are revenues CapEx in value revenues as on more higher less on grown X% me has Commercial a Night] by with decided our focus opportunities growth expanding carrier I as the an by unified England will to getting improve consistent increase and legacy both through capital from provide networks, This those or customer New XXX,XXX consumer results led update our to strong voice cloud markets as for investment catalyst base the year-over-year Northern from customer we Ethernet than experience

side increase past and a XXX large added Northern solution under quarter, secure England, of offering demonstrate enhanced an expanded and a nationwide New services expanded and regional SIP just and trunks Ethernet routers this quarter our and successes buildings we side fiber and than company. solution by our the suite our of include of share voice XXXX to In from medium productivity third allowed fully unified for one managed on-net offering, the business Few tools fiber our agency. us customers a these a and also, in can business And food commercial customers organically examples as and with the cloud England data year-over-year. bank as markets. managed voice onsite MPLS ProConnect XXXX nine more All throughout competitive efficiency. has communication advanced footprint. for known benefits network New cloud miles over to a commercial for us expand switched products service we I add sale our three our very Northern a products our deal for a collections SD-WAN voice data sales small they route robust security providing We that additionally launched businesses receive for solution more national

areas. Looking to carrier are rural have channel, at network within sector well-positioned success wireless and we our within the continue the and across fiber diverse suburban

quarter In connections increased we recurring wireless under addition fiber to contract revenues, a upgrades year-over-year. resulting by carrier on number in sequential of higher and the X% X% monthly

over as and Our XX XX future pending contribution revenues connections install to pipeline creates a months. carry connections XXX between of these turns sustained typically

increasing I am consumer our markets. progress in Turning all pleased our speeds with channel. broadband to of our

revenue in our performance better results consolidated territories. has positive, the been the and do Northern areas with legacy can While England New we

tell about we we're you why excited the remain opportunities doing about these me that Let in what and markets.

small available broadband upgrade Rimmon million million Northern one and made increased Hampshire to bandwidth increase, track revenue recent As XXX,XXX and speeds we're and the year-to-date New addresses X.X demands to In priority. total flat was year-over-year. or in when of X% by and we've faster second X.X businesses speeds upgrades to XXX,XXX throughout a over a additional year-end. on the XXXX compared XXX,XXX This to New quarter Overall, brings customer including Maine have delivering the increased passing homes speeds number to an we England. quarter,

declined million to markets, compared unit faster revenue broadband a year you. due Now, positive let to approximately associated ago. broadband due In Overall, our strategy. million compared down me increases. to tiers per consolidated seeing we're in The quarter speed former largely ago. average network upgrade as with growth Legacy speed X.X revenues is and or the FairPoint X% revenues break the third X.X the year to growth increased increase for this a

revenues pleased increased in XXX,XXX that by the However, broadband X.X%. we to quarter XXXX are third of report or

that customers during Now, headwinds some seasonal England Northern by we while our quarter. increase, know will the New to we're migrate begin we encouraged as this in see south fourth

be me clear. Let

our volume in markets. for New network rebranding expansion this high widespread back installation Northern our put pressure earlier extending create office our We year demand and by have broadband been The able on intervals. our to generated orders readily England of

and New on installation of ability for suspend England As to in a intervals predictable reengineering result, our focused we meet customers. improve to did Northern the marketing processes

While broadband have, a problem a service our is installation of long to term is and good for providing to relationships. important experience the good our hallmark demand customer

So, here is it. what we're doing about

deliver leveraging to have notable now virtually contractors resources We centers, installation the are appointments. on-time field now call intervals of customer we integrated combined We've with regions augmented company. improve and across

of As changes, about we the excited grow these outlook markets. to are a future in consumer broadband result these

closing. agreements experience efficiencies. and in the its finalized, projects. associated focused We on achieve to ahead customer original million recognized And the a third which of gain revised improve integration quarter, two now we've plan. years integration run at ability We'll the within XX XX now synergy higher of remain haven’t end of our synergies million LABOR is we in over target operational even of confidence Regarding of with rate our and cumulative level

our I board declared small and integration. and continue week suburb dividend. eventually latest I'm proven over points. XXXX to and that am XXth approach it business XXrd Houston few paid to announce pleased to expanding We turn Xgig before today our quarterly them fiber to bringing technology consecutive residents. a fiber broadband additional of XXX our we a disciplined I speeds proud with additional dividend to and earlier to services say, We Steve, And over network our to our and extended over this

connections during Our consumer Steve new to turn dividend now call broadband is of payout and activities for up plan revenue. commercial the and over on increased the builds despite tower third wireless ratio right construction With the quarters I'll upgrades. financial Steve? that, for second fiber turn

Steve Childers

Properties Thanks, revenues good Bob. $XXX.X for compared quarter the million, the than third X% year-over-year. to Operating X.X% investor decreased less revenue our by last And of After review results last with adjusting year. third quarter Today quarter everyone. down morning from same our further year. I'll financial were Virginia

Now, let's The $X.X X.X%. quarter, million carrier being X%. at each take one commercial revenue the services of and the revenue total our or driver channels. primary of decreased customer third down look In client a

grew growth consistent just increased as and momentum. positive we FairPoint showing and data strategic market consolidated or revenues in or while decreased service transport million XXX,XXX than or million X.X%. We to transport these are X.X% less continue Legacy data X% and demonstrate $X $X.X

compression investing fiber price are our network continues progs. centric to in evade, we business and As adding new

revenue and stabilize continue to and to expect data commercial the grow. We

with were to of million second due in of of $X.X increased while video XXX,XXX consistent compared quarter, a were revenue clients year. commercial, revenues during for primarily million SG&A revenues Consumer the amortization of last data and the quarter. transport for our million majority due and with the colocation decreased third encourage sequentially were million of $X.X revenue. combined services growth to FairPoint million period to products with exclusive the quarter from special as revenues revenues commercial support. the million X XXXX. compared Finally, increased million $X.X from increased depreciation other sales final down to a $X.X business Operating sales recurring stepdown due to quarter. in products the transition to our former video projects. $XXX.X new the million revenues result as from equipment quarter. markets, increased declined CAF current coming annual $X.X customers over-the-top was to $X.X voice and cost down system quarter revenues Cost basically mainly X.X declined $X were content Network the access transitional million $XXX.X streaming the circuit and to linear Subsidy the expenses, broadband and Consumer for and the for down strategy in flat cost third quarter

by associated the and are realizing [X million] synergy of in as efficiencies the result being union We offset merger, operational recognized these negotiations. FairPoint the savings point with charges severance are

in the expense $X.X a million $XXX.X due wireless fixed of quarter to synergy third of $XX.X difficulty] to million was by the LIBOR convert revenue and total in quarter our for the XXXX. as due year-over-year quarter the the distributions compared hedge to debt. In floating addition portion approximately a This FairPoint $XX.X a Adjusted year compared [technical – to million year. The agreements offset 'XX. a million the third bridge the debt quarter commitment million Net of XX% EBITDA The CapEx $X.X to million declines for to and was associated change the was cost the were in decrease for distributions is interest financing by In was compared realization. benefits Cash was primarily to exposure partnerships company's million. in ago. wireless declines last offset $XXX.X quarter, of rate used of rate third to being XXXX. $X.X with related third of $XX.X the to we recognition the fee acquisition increases from our

quarter Total under third spend cash spend and on and The to fiber new including and hand wireless fiber availability broadband upgrades on liquidity our due associated elevated the during CapEx that commercial was connection with sales $XX work approximately million. turning was revolver XXXX. sold

total the For our ratio quarter, times. net was third X.X leverage

no structure, and to for million XX.X% We the a Cash dividends a quarter. have cost ratio in maturities payout an low debt until resulting XXXX. of of $XX.X attractive capital was availability dividend pay

Now, turning to financial guidance.

be to cost cash the We to a $X until million. $XXX million to federal income million expected million to $X income be of expect in XXXX. we expect and Cash a $XXX do to not payer taxes cash are range tax interest

recovery part of due to in back the for our With capital updating $XXX Bob projects. that, will and expenditure call to are efforts turn range to I in be over to now the We $XXX capital Michael million remarks. guidance Hurricane million closing success-based

Bob Udell

we in results benefits even confident pleased quarter In third Steve. the realize our our closing, FairPoint we the you, as in position and second following year more Thank are with acquisition.

and today. to plan strategy our time our to capital We in questions. turn shareholders. We're Kael? synergies deliver the call on We'll realizing in of combination we the a and financial structure achieving operational taking combine to our return our focused to remain network, integration and Thanks seamless confident as invest we results and in increased the now taking join value benefits are companies. for

Operator

fist Your from of Charbonneau comes Instructions] Cowen Company. and the [Operator Jon question from line

Your line is open.

Jon Charbonneau

next fourth Great, quarter about the the terms taking within the Thanks. our remaining FairPoint markets? do synergies How thanks of seasonality think the in we given we your And how you think models, about do the in typical the of in expected quarters? you timing recommend consumer the for then, question. especially recommend decline business over FairPoint few

Steve Childers

the this Jon, question. Hey for Thanks is Steve.

impact broadband New and I think England fourth do momentum do seasonality with to way markets quarter your again that in do to model question. voice the for revenues quarter. little year, And to I $X we and quarter. Northern quarter, about We have that about high respect might that seeing the it how might about Bob was on financial as talked broadband. the mentioned, we fourth that's the between roughly a split Last have but your for in that think going you that's aspect some hopefully remember we about to start fourth would expect into equally bit million fourth think again,

Bob Udell

process add, reconnect Jon. versus limiting of through will process. online suspend has boxing that disconnect addressed them been allowing putting the The I of of then to affected by or the past suspend that or the And FairPoint impact alternatives and introducing them

keeps suspend the spring allowing to centers a got the folks to summer turn So, of advise in lot little more and a call bit makes in to of revenue account service, those line alternative we've in campaign keep pretty the or through them on the the us open efficient. the the aggressive a to getting

Jon Charbonneau

the Great. the timing synergies? And FairPoint then of remaining

Bob Udell

little synergies, quarters, now three To year divide two the ratably maybe the it quarters, think accomplished XX I that's two a you across -- divide Yes. number I ratably you I probably with could guess. a upcoming think this across quarter, and the

Jon Charbonneau

Great, you. thank

Operator

of Your next the Mark from question line comes Partners. Guggenheim from McCormack

Your open. line is

Mark McCormack

thanks. think broadband. there a assume environment What you pricing hear markets, of grow about I time. I me comment over thanks. your with just that And great, as on Hey that guys, on wireless you're for And your But just do. competitively thoughts pricing out better you could power, then upgraded have thinking obviously seeing And provider I broadband. be whether in would more a guess let substitution

Steve Childers

Tier back substitution pricing. and Yes, predominantly wireless We, let X, or call I'll to then suburban X, then the come Tier and me start market best you might with at the are we the serve rural.

And to building like the opportunities the with a terrestrial feel in with build to ways very it we're carriers allow to wireless And good to in we're the out when from we broadband. us gets of so, and us. fiber passing buildout position benefits terrestrial benefit maximize commercial towers, XG can neighborhood additional that working

close to we're the very to as that opportunity so, to And continues early We've unfold, of some subcontractor as last. in markets a staying it. support got the the

threat. So, I really don’t significant see a that yet of as

helping wireless evolution. been we've Northern of it's to regards that's on more to just set some be pre-XG to fact areas to and X the kind way alternative a meet Armstrong And capital CAF rational. have a of been Turtle, buildout from Comcast, all name going an the hard in front. think of Most competitors for in in deployment New of our And we a I competitors build out and objectives they've pricing. on obligations, to a With of using fixed CAF in not England as diverse MediaCom, Pennsylvania, few. if

go video. entice And up to quarter. And and also content cost this them broadband jumps, improvement as so, speed a we speeds that ARPU see increase periodic two we bundled moderate a and we we when we're from occurs customer like demonstrating have upgrade a make price tier perspective, with

pricings So, well rational relatively competitive. I and to think positioned I think be we're

Mark McCormack

Great, thank you.

Operator

comes Your of next Rollins Citi. from the Michael question from line

Your line is open.

Michael Rollins

taking Hi, thanks the for question.

Just them Just a follow-up. question. X) two of

mentioned have and evolution. as As evade use you to of potential for the fixed and you others about over an be wireless time your think might

is to about if sense question, on your And maybe use X time the to trying those take were to Think your years, take type of at Just conceptualize just share. in in want you're to try risk if then about looking over of that what capability. others an to to cost I'm you broadband think the terms in and footprint your maybe footprint that and curious that achieve where you a it's to can of speed a to second Thanks. aspirations? XX years long-term of to what update, business broadband X)

Steve Childers

Yes, to with about brother that the study telecom actual it watched our Mike. broadband, least at and the U.S. way customers industry as Thanks we associations, Telecom. and think our for The the our through through way SETE of about and utilization think is we evolution question. the

XX allow still utilization when a peak come And to bit average so, view HD XX devices little to the and view out to people seek it our up especially is new continues in that videos.

keep to And our so, going we're the to that a in watching order And carefully. is XX and XX sweet driving we're right in meg meg customers direction. to spot range possible the where ARPU meg XXX

fiber And buildings is example that's more and increase of and so, on XXXX side connected the And a or consumer in more residential our across the continuing passing constantly investing that. of market, well. addresses, the extending past we're perfect footprint as

we'll as from bandwidth connected fiber. significantly continued customers. utilization And what years that our peak five think What homes I question this evolution of will bandwidth that of number of just I track question, have to So, now, with your part directly a higher missed? end see average we

Michael Rollins

of say terms to get in I XXXs you let's seems megabits or want launching general do be cost, the guess, of broadband to companies the to in homes. to cable charter

Steve Childers

Yes, let me that. address

Michael Rollins

Yes, please.

Steve Childers

All way take architecture equal. and to the cable of are and I typically getting bandwidth customers And that many will that people the know customers architecture that. isn’t understand bandwidth the because works upsize savvy created

to certainly in what they the stomach way And utilize load the educate allows to busy efficiently. helps network We us capacity lot have when peak And there. ourselves has X.X customers the take hours operate what beyond to occur. takes dot order actually on busy to manage they hours to and but upsize you a so, City Kansas to our TV approach cable dedicated in it port manage in more continued

very service delivering And very we carrier the continue no quality commercial that to want be investment stay that's spend consumer component we're to say for we to a from to thoughtfully. so, get transport growth. ability but to every going high continues fiber home us. and rated bandwidth we've I think on to of There's and been a best front revenue good on broadband scale We're of allows where we And doubt that's The and real that, in and is us show to return starting the point. deliver. data

Michael Rollins

much. Thanks, very

Operator

Maglan next of David Tawil from Your comes question the from line Capital.

Your line is open.

David Tawil

you. question. you the Thank Thank taking for

a Just couple questions. of

to company close the it all, one telecommunication the wireline getting quite stability. of holy of that topline seems First is grails of

future being being to a either able You on to in guys near or the basis of sometime growth? get quarter-over-quarter foresee revenue flat even

Bob Udell

yet, Yes And David, me question. of relates moves statement, backhaul was from precipitated had few order we And into moved new especially expected. faster years. FairPoint as feeling perspective and it's last commercial a approach wholesale to kind from site it it really it that's than carrier and thanks kind forward-looking to the to unlimited for We're That a comes the this that the we answer. over But way. the pricing. made all the in good settle about recovery we of as world hard a markets wireless per that's and let data

our a England our rules to loose just consumer the space. area show we or what to this came put back So, Northern to provisioning I and very revenue. increasingly to it's with consumer that, work since feel ever XXXX the a point broke for we get feel two ability commercial installing customer the question in our that our space, and just really trials put that ability crystal homes. the growth CCI more more share in at ability agreement confident and CWA selling I of sales for you collective of an And strategy deliver scale flexibility basics play final and team X% and to on consumer in to our a a IBEW terms our in as approach to broadband confident and can confident tell in weeks the of ball lift is initial and process on New Night achieve carrier labor fair I more giving targeting

we're question XXX upside X% the capability do really our Northern penetration penetration or average say. an England England. in that in some being We've on but Northern penetration on can front we and process so a we have know New have diligent a at we time fixing XX% that's we I real just the taking the an of we X% being got to average meg represents neighborhoods it in way in opportunity or is the with should have well. long And way why consumer answer brand So, under the the New markets

quarter that trend can models the you can happens that that can't this us that advice with or you bullish. that, overall, you what make results tell consistent we you context estimate I you see the in but So I I tell really we're have giving give pretty in quarter's lines

David Tawil

hurricane next And give what And side, I answer the target return you, on is kind opportunistic CapEx percentage increasing opportunistic that of for have. that With question CapEx related. of thank and that. can us tails then a is company's side? well what's that those Perfect. guidance, sense to percentage the the the on And to into you regard what

Steve Childers

that. hurricane wouldn’t we only, say have to changed look increased Yes. The the projects were way we I at XX:XX. that deep drove would and really this probably it it's guidance. get into contemplated If how CapEx to new But that

back long. can but and and of their the only in total of some take quickly less financials, there it's whole region didn’t and had that but restore from hurricane report card technicians set from the that. the revenue Security there and Northern in Department XX% box on will less X% We've our Florida so Texas moving I is it's and the impacted we've as they and had me management Governor were New service significant scheme But an We Homeland an very a wonderful whole from situation. a of the for a it in and a situation was, excellent residents excellent they're customers scheme Let Pennsylvania asking and and response, devastating than and well. England had comment from from for from

So, to the recovery. about way be to long going a that is road think it's to

I see So, at being don’t don’t financially. spent it'll noticeable and think be I all once of money the

On every front, payback. meets IRR it's XX% that two and stretch, a committee in our have on some very the weeks, prepared a returns, capital in while frequently remarks in we month And we attractive. see said for still XX as as those the project we I case look we pressure

David Tawil

Got from price the the over The it. that of And and the the officers stock question. unique then, really company day-to-day. and probably stock so I last day of throughout time. one market is have company And This all the just and lot whips made a a question. in its company does the purchases trading to volume frankly of know credit directors the open trading

So, at the note company at concerned them, all if wants not on I'm of this wondering to if least is of to sure comment that. that I'm any

Bob Udell

price. and of still No, sector. know speculate can't robust a Those we us the mean, it's it stock really volatile that market can't. and it's a I on I

David Tawil

much. Okay, thank you so

Operator

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

line open. Your is

Frank Louthan

do about you contractors thank that And expect the Can yourself when talk what's kind a us if the then from with it's when XXX,XXX from as expect do to bit the and pains? to that so that marketing you. that impact you growing you've do of and were to hired margin wean you earlier. back Great, homes little you the see project you

Bob Udell

Yes.

the XXX England, we're XXX,XXX end complete. -- of robust But or in certainly across year will market. completed in in the approaching end by months The on few XXX,XXX the next of total upgrades Northern by increase able comment all the it's on specifics to or whole year. the be the the me addressable the Let And in company XX,XXX is depending first. in projects New more all a that

So, let's --. say part with the regards to

Steve Childers

Margins?

Bob Udell

to the and on employees with rather the bring me and flexible that in labor bring we're The it back term work loads. to long peaks margins. explain around meet to positive them why. agreement the us up difficult across for markets you the flexibility that resources rules as and them We've impact And would a contractor new states margins. states three in insisting made resources result to our had a home is in really for manage would peak we Yes, workload the whac-a-mole sending than contract their order playing supplemental let in moving keep

contract employees installation for Our behind in deployment peak like like use and with of work facility poles But front only scenes rollout keep we customer periods the penetration. in and additional preference we will manholes resources the that. our of the for and is them hit cable to when line things like little use markets and speeds

So, it not a negative. really is positive a on margin,

Frank Louthan

So, so rules work have with contract? changed flexibility the have now we'll when do that the new you the or

Bob Udell

Yes.

Frank Louthan

that we company-wide England just is And Okay. across or New Northern or how should look that? at

Bob Udell

operate we We've in the in markets. consistent how legacy other with made it the

flexibility. It's we to meet because with. demand things. one, the how of work workforce the to why And been in got not unions quite to that and we going two needed and order want so, we're to respectful capable the very and rationale educating the the they're done do And customer wouldn’t that, work explain it's we agreement they

the one spread as the inline so, legacy call well Northern sure step And the New the calls keep we our make across central was consolidated could centers England. cost region to in region, in as

a center XX after and application from Northern England have and days XX So, we've a call now. New in agreement, last Minnesota of been after taking the the call month, for unified since Texas close days for distribution the calls through And wage we of agreements. platform perspective the

And additional then Michael. at with a and those began by address reasonable the cost little contracted on supplementing impact broadband availability resources in spikes been our workload an a order On in there's workforce and of say side, will of bit technician the we speed Florence to resources upgrades.

gets little a of flexibility but bit New England been headwind the operation. us with consistent the in Northern that's So, a of rest the consolidated

Frank Louthan

great. very Thank you, right, All much.

Operator

question turn am would Instructions] conference I showing back Mr. time. the now like at I this to no Udell. [Operator to further Bob

Bob Udell

all call. updating you to a you joining of have next thank taking XXXX look on us to year. full-year I for Well, today and forward our want our time We to financial join day. great Thanks, results and

Operator

your this Ladies conference. today's Thank and a concludes have participation for day. and you gentlemen, wonderful

You disconnect. may all

Consolidated Communications (CNSL) 1 Nov 182018 Q3 Earnings call transcript