CNSL - Earnings call transcript Q4 2018 | Consolidated Communications Holdings, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Consolidated Communications Conference Call Fourth Quarter 2018 Results. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Lisa Hood, Treasurer and Vice President of Investor Relations. Please begin.

Lisa Hood

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

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

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

Robert Udell

you, progress, advancing broadband everyone One, you we Communications' great joining Consolidated for levels service XXXX and quarter and productive where and morning, call. Thank for fourth Consolidated. was made thank our a good business and improving Lisa, year strategy.

with into during in $XX our labor telecom and highlight the completed realized fiber scale second synergies, well we provider X%. and ones. of than U.S. growth will the transport expanded top and revenue higher achieve more new serve fiber consistent to integration with speeds, year. group which are have employees this support support we passings $XX target in the XXX,XXX enables achievements Northern some in network Northern making opportunities by added and increased new broadband This XXXX million rate the pleased run Consolidated in We very our significant of and to end to and within better to acquisition our a like of We've meaningful New quarter broadband properties of We customers by has achieved bargain services. flexibility more year-over-year would data I'm New more for of agreements England XX and our the carrier our million having our plan and already synergies recognize of aggressively resulting delivery our in secured reliability. network increasing England, commercial than and with to upgrade increased speed revenue increased We us

and skills one in customers strong our expertise this we're Our employees to and have committed We're combined provide area. great making our and better their team, fiber better products together and over serving formed using to come robust service launch network. progress new

have revenues carrier in Ethernet as we Now this let to me our turn grown catalyst channels. commercial more contributing three Within our year-over-year customer revenues X% a the growth. data with channels, and than transport and to X% increase largest

CCI several Ignite. XXXX, ongoing fiber Our retention. in expertise our solutions products is as process our sales which to advanced supporting and based complement network This growth new enabled in has us launch to during known solutions process key building customer

trust hosted And development For of DDoS Communications example, including expansion an mitigation solutions, IP and networking a to solve calling customers products, commercial the This institution including Texas. internet our fiber advanced large and Unified platform meeting, for Cloud anchor show with commercial us to our features contract problems we Maine, sale to Cloud LAN a opportunity a Connect, as a market to diverse XX an of to of a network with the the diverse business ability future. XX services sale Ethernet serves education to A customers. serve collaboration, in build can secured we Peer including suite In company based additional we launched higher SD-WAN SIP SD-WAN in sales DIA data groundbreaking our in passing locations. notable distant XX regional gigabit XX base, Dakota customer a to and bank locations, with messaging, that And dedicated allow North a using has trunks, with highlights Secure. the sale and with reach and enhanced a to for security adding ProConnect, another we win advanced few the branches. our manufacture company was

to as to customers, Northern above we in the the sales with associated new XXXX, this the past growth I compared are England X% orders and a While want fiber our they to quarter to our expanded generated throughout expansion the value highlight within of network. for of the in momentum I examples sales channel New customers specific extensive also commercial benefits commercial bring the demonstrate XXXX. we with offerings as as share our our examples during footprint ongoing these product

our installs, contract Within connections total fourth to year-over-year. channel, under of towers compared the X% as total carrier quarter XXXX. X% increased pending increased the the wireless Including in-service

in Our quarter XXX install Major XX multiple quarter connections a quarter was and a tower backhaul agreement England fiber orders the future Minnesota hyperscale contribution fourth Northern to for XX-year Overall, carrier pipeline for channel. wave included revenue. carrier New creates a great in agreement, of fourth gig a our plus over pending XX our meaningful dark markets. services fiber

or channel. quarter consumer by increased when the X% Overall, the XXXX. consumer in to $XXX,XXX broadband to revenue compared turning same Now

service we and with these revenues to ago. times faster response Overall, good $X.X year market in to revenues growth or me the due break increases. Northern Legacy enable compared is ago. quarter fourth is X broadband $X.X in approximately positive increased noted to seasonal to a in we year strategy. call, improving down. were X% progress our impact England speed associated markets, the Consolidated driven driving winter a by Hurricane earnings seeing improvement Michael This the declined broadband delivery restart consumer FairPoint upgrade million continued the On of revenue former broadband revenue million growth New the speed In made ARPU past compared network mass quarter, top the as our The growth Florida and both faster Let this and X, our with to with tiers consistent typically are quarter this week. Northern marketing we in enabling mass priorities trends us England. in areas, experienced very -- are New we third speeds. of In fourth scalability, in

New we ARPU retention the in upgraded as back our expect of Northern England, see fiber to full increases take network improved lower up recently in ramp and advantage As we churn, marketing in area. we

office and implemented provisioning call other routing service also and in across virtualization wait place, dramatically our resources. systems our broadband times call abandon spread have bolstered processes, calls and With the new enhanced labor agreement centers improving and We've field lowering we rates. back levels,

us delivery As broadband XX%. positioned a have intervals, result, of broadband This by take we the shortened on-time has rates improving upgraded speeds. XXX,XXX our faster over advantage with appointment overall to while passings

of data you, in confident first in our I'm tell have report pleased done quarter. that growth execute a and this in will our before, consumer England can me with we markets this progress quarter broadband proven in we playbook upon and legacy demonstrated has consumer Northern Internet XXXX. revenues our and Let improvements and during connections overall New we've very the in X% increase resulted

declared up, I would May our board like on payable X. our recently to announce dividend I wrap As

call Steve review. the the I'll financial Now, to turn over for Steve?

Steven Childers

XXXX. revenues X% good for Thanks, less quarter Operating for fourth review everyone. than Bob, the provide Today, year, quarter year divestiture quarter to morning adjusting compared and the after as $XXX.X properties, in the for July to same full financial I'll Virginia which XXXX. of occurred guidance down last our the then results fourth were the and million,

and as fourth total $X.X color channels. million can commercial and $X Other In the revenue transport strong the from million structured million, million or markets. down $X or on to the consistent majority million our former strategic service these quarter, increased X.X%. growth Consolidated FairPoint revenues X.X%. continue the FairPoint in increasing provide due to I'll coming of X.X% continued sales former or Consumer projects. quarter, momentum cable the decline revenue for -- while increased data X.X% for was accounted grew revenues or while markets grew FairPoint carrier to of Now, million $X.X and Legacy some data show and $XXX,XXX. demonstrate erosion voice We equipment $X.X the customer commercial $X.X each revenue of transport

our of of compared products, products net video were increase fourth declines quarter of down II debt was improved improvement. headcount agreements $X.X in CPE we expense year, non-cash cost to $XXX.X year. of depreciation partnerships to with expected, broadband $XXX.X rate step Adjusted occurred in $X by for our The Network of for down XX%. over-the-top continued efficiencies SG&A are legacy XXXX. revenues our in the XXXX. Total fourth FairPoint $X.X million to the -- quarter merger. Subsidy quarter, $X.X for synergy amortization, our $X.X a the fixed interest the offset realizing as liquidity, year in of by last million million revenue year during incurred declined million. the the $XX.X due a Northern million large $XXX,XXX. in cash higher million increased Cash year-over-year support was associated X.X% revenues declines primarily third hand final under annual was the $XXX.X were in CAF of million for percentage and in video content and is New change associated million availability excuse approximately is and expenses, we million by seasonality to for transition which in exclusive $XXX.X or to data declined strategy million, quarter. increases $XXX,XXX this by fourth trend revenues million with totaled the to As $X cost synergies quarter me. $XX.X to Consumer was and of of compared expense access quarter, ago. million our quarter $XX Operating streaming compared quarter million interest speeds the quarter cost were Net interest quarter, the resulting the transitional million very of million full the consistent linear used result from with equipment of the wireless offset due X% services In equipment commercial strong England and cost properties. were LIBOR ARPUs. $XX.X from to that a in higher COGS distributions compared mainly The million CapEx achieve on the as being and savings driven revenues broadband hedge customers or to Within and $XXX.X quarter to sales revolver are a X%, and or our $X.X increases million broadband target including last higher million reductions. fourth to in $X.X the fourth encourage offset in the $XX.X due expected EBITDA operational with

the net For quarter, fourth our leverage X.Xx. total was

to at structure with continue a until XXXX. attractive no of maturities maintain We debt an low capital cost

XXXX interest and area the Now, of for expenditures. I'll in provide cash income capital cash taxes guidance cost,

expect $XXX in to million. cash interest of to costs be million $XXX range We the

our XXXX expected million estimates a Our payer $X on to income income and expect of cash federal not interest do forward-looking and are be Cash to XXXX. to -- structure, taxes until current capital our the $X for based swaps tax rate LIBOR are we curve. portfolio be current million capital

The $XXX to projection, of spending. million. York project Finally, due from decline expenditures and be range expect build to upgrades, CAF-II the expenditures we of out million the to is expected completion compared lower a broadband integration in $XXX capital New the to speed XXXX lower CapEx in capital

investment will expansion support success-based our we network speed on broadband projects XXXX, and During focus fiber upgrades. to

back be expect turn with Bob associated projects. approximately now for capital to With success-based our of over closing call that, intensity We over to with XX% I'll remarks. XX% Bob? revenues the

Robert Udell

as overall XXXX strategic We the creating now In full In we're the to groups. profitability, closing, fourth we'll we our share, results, even increasing to company our building on market the our shareholders. and invest Steve. an in and our progress year. remain improving on long-term broadband we you experience X network, especially revenues. more confident and last grow targeted questions. continue today. and customer we Thanks, taking invest time investing and our the for pleased competitive results for with significant future us the in and delivering quarter strategy plan fiber we upon as our focused focused in for value Thank take Laura? business and We're in are made join customer year And stronger growing the XXXX,

Operator

[Operator Instructions].

Our of first Cowen question comes from Jonathan and Charbonneau Company.

Jonathan Charbonneau

been transport in stand you we within do some segment compression remarks? about of especially And in think you. Where this price given within be data growth should prepared do that had the about the you talked the business? you backlog thinking how terms year, and seeing you Thank of the

Robert Udell

Yes, Jonathan.

reflects on and any that really XX% we're cases, I fell can't few carrier we We've is all where it contracts write-down. remaining in got it really which think most, through As -- a the price the compression, a in of that. XX% well, most, specific that were to

have for And channel as to gen in or us last tower well. that continuing Q pricing renegotiating can same out date, to worked into a to we early We've opportunities, those per time that pending. structures and have We grow. is see traded connections. now I that's mean, like revenue gen XXX you up we're pricing sites year second up quite XXX from third first with or bundled -- new

So through perspective, think carrier it. a from well we're I

Jonathan Charbonneau

And and how of $X.X system construction that then quarter? much million fourth of in in special business the the a sales one-time projects, was

Robert Udell

Steve?

Steven Childers

Yes, Central third Illinois pretty certainly been it's one-time. year in There's They project quarter. had in a wouldn't a XXXX. And Jonathan, large I fairly hospital. had CPE construction multiple say for strong for a buildings quarter, fourth we

So run I more think opportunity I item. that a continue probably rate, also won't run but there's in at and wouldn't as 'XX that classify one-time it to

Operator

question Our of Investors. Berkowitz Marc comes next from Aviva

Marc Berkowitz

coverage your competitors, to industry their mid-XXs. of the participant dividend into One cut another their get ratio

to you before get than you I higher coverage your your wall, wanted maturity then have feel dividend considerably but far on you commentary you Where away. consider where to that. like And with refinancing? are a a see comfortable isn't do guys XXXX clear ratio. leverage You would

Robert Udell

also for Yes. our aware doing pile Steve will are Well, let growth. in of focus well what on the on. we in me we're respect others industry, us start important that unique We're and certainly around then but what's

that announced year, continue about mean, we million to back decision and here's in And allocation shareholders cash. we February the use for think of Looking the declared our XXXX, board X of think It's capital -- it, have -- And we how dividend. we last an in we and returned May dividend. Tuesday, highest company specifically. evaluate $XXX paid the any here's best how about I to return like we last other

But best at think felt the we decision will Our we've for safe. coverage for good grow ratio shareholders. what has always value been making

far as As leverage, Steve?

Steven Childers

pointed leverage, XX% of fourth on to mean, Yes. ratio until bit. the Well, to you business. I just maybe little into structure, pile to have taxes, still We're for respect given we're to With and as that again, XX% XX% answers payout the XX% income back maturities the CapEx our investing current question comfortable cash generally -- we're a was on given range, capital XX%. in to quarter out, comfortable no the we our XXXX. our

from be the have of here capital is than term. get lower before Leverage side And sub-X think late X.X. or to the -- to that's fixed. into the given We cost I XX% debt X.X%, or 'XX near Our want be of we 'XX whatever. refinancing 'XX we current in in is about that

So we are address to that. trying

Operator

Our next of Frank James. Raymond from Louthan question comes

Megan Yang

It's Frank. Megan covering for Yang,

see the then I passed? will video benefits is stop same see to are expecting the homes you XXXX? you saw what's So the the as you for losses $XXX,XXX you year? question for And mean, outlook from start in the your that to when pace second

Robert Udell

Yes. Good morning.

at our customer pipe. to look is around the broadband consumer If strategy the you secure

emphasizing away as way video most the set-top transitioned that for cash so doing or way attract And of from more to the us customer. using has cost to the only accretive video retain box a because in broadband

us decline So and we're perspective. it's for going from managed through actually of line a that, a natural cash bottom accretive

video product that's that. it offering least, with set-top 'XX, more in So of around the broadband the our talk of through, to year continue about the the complement long later ways we do going over-the-top part without our at as to we'll and as have can expense to continues box on although emphasis

Specifically, programs office terms New has last to England. in picked reignite and we've activity the quarter, though, of XXX,XXX opportunity to in Northern some fix our we And gotten need consumer, the things broadband created marketing we've provisioning about an us. talked upgraded on have that up. the that rates behind back Install

will making date broadband consistent We are Northern on makes week. reengineered it we have which enough the follow allows in our home quickly negotiated we or and schedule, last as now are with on England conditions more our a us troubling. -- are installation sure whole storm installation we creates seeing so with much gives reduce a hitting sense, much meet flexible especially that this. it that install confident more more that we and restarted consistent that marketing where We get -- rules us Wi-Fi and is in severe a use can to distract customer that basis those installs and resource the basis, recover benefit expectations. -- back And New the And dues that, are process, dealing our to weather flexible of including they the more employees, we of that a coverage work added one with customers' rules, that to better visits from from things experience, up confident can we consistent

Operator

[Operator Instructions].

Fargo. comes of question from next Wells Our Hebert Davis

Davis Hebert

the in leverage ask you you share expect about I this then, talked some some realize markets. to question. market New of have England somewhat that the the Northern year, synergies opportunities and obviously again wanted on you to I know

around side primarily from growth, or but with flow? cash us repaying be know primarily deleveraging debt I will you will give come from can't is that guidance, you EBITDA idea maybe the So free that

Steven Childers

is this Steve. Davis,

answer slow growth do think the carrier improve revenue we flow extremely to we had revenue cash and in that which to we profile I really we're in down a focused the or which combination is and free we've again expect need growth on, our need consistent way decline, transport.

expect XXX,XXX -- like hopefully bit. that New We feel We to about England grow capital a we good haven't Northern really talked the quite feel in benefited little whatever talked upgrades made thread going the for we with the along that we've we be going forward to that Northern about from the or about in yet forward. well how making, expect bit. for needle investments investment Consumer, England Bob a we've we've plan New XXXX. we're able do

So, I referred I've always think, the seen field particularly to on, this be combination. bending curve, we properties. improvement is the revenue going as a with FairPoint

have opportunities key on and initiatives. execute -- We synergy, to across that continue continue cost to structure just will those cost we

Robert Udell

And possibly I'd below mentioned, is, we add X what as we fast can. Davis emphasizing as are as getting Steve

so point The the combined going focus Steve both an second CapEx. entity. on through spending on And And half forward is to running our primarily as of CapEx in can is talked our cash we're biggest investment smart that synergies business at improvement integration less about XXXX. we maximizing and cash 'XX, guidance. we're the of operating

the things projects part, so including funding get most out side, with that CAF-II that, plus we the all we which the and on for have And lowers capital CapEx. us come the behind of integration

from lot together, more comfortable perspective. those broadband York XXXX. on we cash we're That's you trajectory a a a New things add like in build the have You feel and through

Davis Hebert

portfolio the there? I looking really more you're helpful optimize if commentary. front. your I always on are thought a can process just within potentially asset or That's probably the mean, is footprint. of obviously, of ask mean, your part And to -- I sale one plan leverage

Steven Childers

We've side. our sales, -- I we Yes, with mean, entertain on with asset Davis, We is FairPoint Steve. We've would Iowa. done this it Virginia, Iowa done that right. the

transaction. think several smaller that properties of operating I there are the FairPoint were part

-- requirement, properties. do all I through on a got running selling seeing consider minimum lot package think right but or probably based that process maybe us a serving X as all we've -- valuation, see certain as minimum channels. the on that to a customer vehicle guess, we're or taking that growth or think consider And a we of We those. ones would get would inquiries of We -- for the doing valuation aren't probably we're not the the integration I -- a inbound to be distraction. and for I and anything not there's sort

we evaluate overall, that, we'll But -- would think, I there things assets the under portfolio in that So, and are selling. circumstances, other come probably there's us. to those consider right again

Davis Hebert

guidance. have And one and last on I appreciate CapEx, question that just

in based I mean On more And front, activity CPE? how kind different be characterize piece the from or or focused would an Would success what's of then broadband buildings perspective? buckets? you maintenance on-net it the

Robert Udell

or XXXX, ability doesn't the on focus our teams is network the regions the step Yes. fiber at the we capital Great require more CapEx an as that maintenance to CTO was disciplined and the bring be from and will Steve -- factor because 'XX in order question. a I And bought ready. network of step It get evolutionary operate, very function the that carrier with investment. of in committee from reasonable least fiber much do a 'XX expansion, of amount actually we it's mean, well-built forward sales FairPoint they also why time robustness of function our in and is chairs of network. and as investments and at the minimum a than more to that

can And a so success we more on incrementally build basis.

CPE of success-based on and would -- the look when into directly get at It's orders more I basis we associated a the is So with and sale per then distribution. most contracts. go CapEx

Operator

over the turn our for concludes Udell to I'd closing call Q&A to portion. comments. Bob This like

Robert Udell

taking quarter you And great forward discussing we much results. day. to to first again to a today join Well, quarter you very us listening next with appreciate speaking look and the time XXXX. we of our and Have

Operator

participation conference. you thank for your gentlemen, and today's Ladies in

day. Everyone may a You wonderful disconnect. have

Consolidated Communications (CNSL) 21 Feb 192018 Q4 Earnings call transcript