CABO - Earnings call transcript Q3 2019

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Operator

Good day and welcome to the Cable One Earnings Report Q3 2019 Conference Call. [Operator Instructions].I would now like to turn the conference over to Steven Cochran. Please go ahead.

Steven Cochran

Thank you Sara, Good afternoon and welcome to Cable One’s Third Quarter 2019 Earnings Call.

We’re glad to have you join us as we review our results.

would forward-looking remind events statements I discussion that and proceed contain may relating we like you to today’s expectations. Before to future

actual from find to in today’s our can factors filings. could and Cable You SEC that earnings release differ projections these One’s materially recent listed in cause results

information no otherwise. and as disclaims to its statements whether any or One update except as Cable alter or obligation is obligation result future of new a under law expressly events required by forward-looking

Additionally include presented financial conformity financial website our accounting earnings will GAAP this today’s that with measures can ir.cableone.net. comparable of at directly on Reconciliations measures accepted our certain release remarks call be of or discussion the most in to generally are on non-GAAP in not discussed principles. the measures U.S. found

on me Joining and President call our Laulis. today’s CEO Julie is

the me to With turn that call over let Julie.

Julie Laulis

our us XXXX you earnings you for Thank joining and thank Good third quarter Steven, for afternoon call.

welcome results, welcome a have little Fidelity. part we member getting more as Kris acquisition to I the I from I’d to already Miller team. Before Cable extremely insight an addition unique excited about moment and a the are of want exceptional newest experienced who will us of than our our our XXX later. associates One take join to them into talk who new valuable to more a But the our to is Board also Board. Directors. like Kris of will provide

shortly over financial recap for quarter before our begin full performance. then that of quarter important talk the and giving of about end from happened couple highlights call the a to the the I’ll a events handing Steven by some after

delivered and EBITDA to performance pleased quarter increases X.X% XX.X%. in We have strong again total of adjusted are of revenues of once including year-over-year a

quarter. margins XXX points the Our year-over-year to for adjusted EBITDA basis XX.X% increased

margins. adjusted as growth results business deliver as both illustrates and consistently expanding strategy our to top-line EBITDA These that well continues

Speaking our in growth from unit was the or Clearwave. we increase and residential year-over-year of residential X.X% up services business resulting HSD year-over-year Revenues X.X% XX% an in ARPU HSD of HSD impact X.X% residential excluding XX.X% increase experienced were a up revenues.

accelerated advance As our the you in NewWave we billing year of recall quarter in spend system third marketing last conversion. might

So expected a a to net standpoint. from have add we comparison tough

with configure Given that their especially an time. Group challenge portal Wi-Fi launched activity enabling business offers relative with monitor last network customer cloud-based Wi-Fi at app which we solution our manage service are year. and performance anywhere pleased Meanwhile and to our agile user businesses and to enterprise user Wi-Fi a enterprise any an services from

provide On launched HFC connectivity side that service the speed we of needs the to greater those sized faster gigabit meet businesses. SMB and growing

in talked earlier Our XX,XXX the touch is that the which with help also expect a business points team improve I us CRM about will update of efficiencies manual approximately annually. including year we proceeding reduction

our our As mentioned I call, of during are nearing integration end NewWave efforts. the we last

completed more Our integration team a remarkable we during has two job important and initiatives. recently done

This testing. the after billing of move HSD months usage-based monitoring and grow educating contribution will into we as activating First several quarter. NewWave and ARPU fourth

team XX the September contract expiration the of line NewWave One Cable ups Viacom. following with Second to match video legacy revamped NewWave’s programming

very changes related channel a The team customer-friendly in communications and volume executed effective the and customer and the call handled manner.

Sparklight. our those consumers say is seen most XX% approach in recent We’ve One company completion progressing of Cable understand the that positive also on as those Sparklight legacy Our well of research Cable markets consumer our based sentiment markets. rebrand same they as One of we is as

effort a making forward markets deal planning completing XXXX. time the And of all rebrand and past a Fidelity about appreciate in technology. our noted the hard-working and as perceived close acquisition. associates the look our latest great the QX Sparklight new year We We consumers of positively brand these success. internet over surveyed provides the invested NewWave’s When commitment one brand rebrand in in they to of to feel of that we the our

past worked We be who bring appreciate us diligently to Fidelity’s with Fidelity the ownership us group which over months several into fold. the prepared well allowed to

transaction. In October addition was spread market With months, last various X, visits closed to leadership to the Fidelity the and numerous markets day team each on our out to six visit we over able the execution believe able all to associates we great Day some X to HRIS off as This a such onto accomplish Fidelity start. is of achievements were we we moving and are corporation encouraging immediately. type our system this

provide will quarter details our Steven now on results. third And more

Steven Cochran

results. Julie, once were financial Revenues XXXX quarter million for compared in to prior again representing increase. of year $XXX Thanks The the a quarter third third million the strong X.X% produced $XXX.X quarter

residential mentioned a revenue the of by Julie As increase fueled the business X.X% increased HSD was XX%. increase services revenue of and

X.X% revenues total increased operations Clearwave year-over-year. Excluding

point income the in or prior the XXX $XX.X Net $XX.X million Net share basis of quarter expenses XX.X% third revenues quarter compared diluted prior year expenses quarter basis revenues in improvement. share. XX.X% administrative third $X.XX point or per of million $XX the a the year Selling fully of were basis and million. XXX was $XX.X XX.X% million a or to quarter revenues the third of $XX.X was improvement. revenues income or Operating compared quarter XX.X% in general per on in in to were million

were going adjusted XXXX operations. to XXXX XX.X% in of Clearwave million million and in quarter a increased Or for million Our in $X million from related XXX with respectively. expenditures quarter. $XX.X Adjusted the increased our EBITDA for XX.X% $XXX.X and million percentage expectations. Capital to $XXX and from adjusted XX.X% third of capital the capital $XX.X and quarter as EBITDA current points Included were expenditures revenues the Year-to-date and quarter line EBITDA respectively of XX.X%. totaled margin third XX.X% – the expenditures prior-year was basis year-over-year

liquidity $X.X From third flow. on In and XX in generate to had September cash $XX.X of as quarter standpoint paid of million million our approximately $XXX annualized we balance XXXX the billion each times hand ample debt significant to cash approximately EBITDA borrowings. continue debt at of with term-loan Overall our was end free last we debt providing of in us adjusted cash-on-hand quarter dividends was we liquidity. At a in shareholders. after X.X quarter net to consisting

also available together order the we with Draw million the We the under October was We borrowing price revolving over subject to in of Term facility the cash our fund X On to Delayed had million Loan in integrate amount to as cash-on-hand October of A standardize $XXX.X quarter three the $XXX.X $XXX capital and years proceeds the million end. purchase full for disclosed. network used as drew incremental established Fidelity adjustments. Xst. quarter acquisition customary second which also in credit next the previously spending and on up anticipate The million to in the closed $XX

expect in we Earlier We acquired and Fidelity some operations. going our Clearwave cost on today the IR filed realize $XX also give approximately synergies we financial SEC site, rate expect presentation to to the Similar which the next operating Fidelity an not forward. results separately report to estimated circulars is with for and do of three million key run investor posted years. within the on

been Fidelity’s balance with the the the net-debt-to-adjusted-EBITDA third and total the times have end approximately to adjusted $XX approximately leverage effect of million debt annualized including of year-to-date $XX transaction million. a giving ratio was quarter X.X EBITDA balance $X.X and approximately cash at After billion a XXXX of of

work as quarter the we are opportunities We to integrate Fidelity that excited pleased and provides with our own. into another about their operations strong

now ready we’re Sarah for questions.

Operator

Cusick Philip JPMorgan. question [Operator Please from Instructions] Our first go ahead. with comes

Philip Cusick

Thanks. out to a the of typical of was guess that $X incremental rebranding let’s your to run to questions seems rate pulled I lot that. Thanks. there on talk million The start marketing? about cost be

Julie Laulis

rebrand and Yes, we it XX% on originally far, And was One schedule. for right between that million NewWave. about million and $X We we’ve said legacy on spent spend Cable Phil. of so $XX would the that

Philip Cusick

And early spending in XXXX? finish you said you’ll that

Julie Laulis

XXXX. In

Philip Cusick

you year that? spending that XQ about in XQ ago given in spending quarter. have XXXX surprised a in any How think didn’t the then spend and that the should subs impact this lot drove And the terms Okay, I’m money rebranding – a of that we marketing of that sub-numbers are on

Julie Laulis

is the brand rebranding about not acquisition. Well

spending And services what a Sparklight. everywhere on-air from to things people of uniforms and redesigns is across on really impact big And to think Sparklight One from business makes it getting I well. money to mean. now office Cable does advertising as that’s business So do where it our is broadband understand sales lines of that all

Steven Cochran

impressive". Phil you spent less added "Boy, year of be customers to your marketing that’s same number the I question going a really and this lot thought in was you

that’s mean question. I not So a really

Philip Cusick

definitely was question. my That Yes.

Steven Cochran

Okay.

Philip Cusick

was let I’ll out then okay. margin pull one strong. really the on But growth the and topic this when Well, go. sequentially we that Last you

is So going is run Or of rate sort would this there forward? you. good a anything abnormal? going off Thank this else on make jumping that period

Steven Cochran

think I what to on any always to There’s business the strategy. of have that we is, expand to margins see we would one-off we And execute we No, given continue. things. continued say have timing continued as in quarter, expect and

you programming do when happened customers has instance adjustments margins. those first before things impact the for in your increase rates rate So quarter for

is continuing we is and as look there to reflective we the way margins at think long-term it see but that. the overtime, So is of always about this which timing, we increase

Julie Laulis

For acquisitions.

Steven Cochran

Yes.

that when lower in Fidelity as will margins we business migrate and has acquisitions, impact, model. them will For bring which our toward continue something that to

Philip Cusick

much very thanks Okay, guys.

Operator

from next ahead. Riley question Zack Please go comes B. The FBR. Silver with

Zack Silver

thanks Great, question. for Okay. taking the

how acceleration the think going of that is about, mean more so NewWave And is sharp guess more muted? trajectory the I rolling be, there? of sort to quarter. the billing this front on we’ve we usage-based there the should Or that? going a seen? it be that On like I ARPU out trend to rollout based

Julie Laulis

Zach Julie. its

at it I the rollout think see quarter. of last – and did just we’ll very what week the

said. seeing we’re quarter throughout is results what fourth the to we’ve the So start going exactly

We’re continue Cable move going look to like One. NewWave to to

been ARPUs you see steadily to So have more closer ours so. expect their become getting to would to which

Zack Silver

more Okay and then high-level one.

fixed your ability Charter view Comcast wireless like industry convergence. MVNO Altice through we your thoughts updated wondering, around, to doing. I’m relationships Just if get sort are and sort offerings can as an and we your get of and how of continue bundle wireless you and to

Julie Laulis

at MVNO sure with and all. Well from and have that don’t opportunities now. something in my see. amount comment it and always are of learning I right ringing think about to right growth that the and the we’ll and others I giving margins the a first model now large is, I find that not guess we our existing we into I’m business is work we But interest thought want if

Zack Silver

last then sense. the And for That one make me.

A hard planned on new would that? the on is Just be trending? you De-accelerating? great. number update give can penetration Accelerating? How that any

Julie Laulis

so – Well I’ll is the Yes. number still accelerating. you over is It XX%. slightly give I’ll –

I think higher is I speed the consumer of the of unlimited interesting our note the percentage that the took selling. thing that, that takes, higher

is that take if take highest percentage gig say, unlimited to of group. any So that service our consumer the is there customers you of the

you. interesting for just So fact an

Zack Silver

interesting. is That

thanks Julie. Okay,

Operator

from go Our next Wolfe question comes Stephan with ahead. Please Bisson research.

Stephan Bisson

Good evening.

closed your how use of think pending. you first with attractive you I you find out there something So a Fidelity-ies update to this acquisitions? the Can cash? were in And while more haven’t on Fidelity you many might is, see if time us

Steven Cochran

were the would what’s this we we a to that trying find summer spend say out we’re necessarily Sure, we time that on I didn’t looking XXX% always looking process. of Definitely because integration at lot focused next. think

more a on the position on I so again. to to we one – allowed then started the obviously get in did the of combined today. size what than kind we we we the that One so because than with time. jump last looking where we is And move us on to And fact the quickly, be this of along process Cable we the one was one, One of probably say will that be time. but that But start just to Fidelity NewWave really further the relative been Cable would’ve of at NewWave think, relatively size are this

Stephan Bisson

off on the right screen share return capital the And something doesn’t if at dividend Okay. update repurchases? away any jump you policy

Steven Cochran

Yes.

think we I dividend. is set capital opportunistic have which very our to predictive whenever pretty And it we’re a policy share repurchases. comes plan is to

of of balance of our And that the think we than leverage the sheet value that we more would flexibility the you perfect there value so amount and flexibility the are knowing – point. our to I I trying this opportunities out sheet opportunity maximize just the tell level of at balance the

Stephan Bisson

there how us you I be Understood, conversion and and those then system in lastly should remind the potential guess much cost. amount? the longer Can dollar

Steven Cochran

Yes.

I Yes consistent of you be year. go think rate middle And what limited. run next through probably ahead. the So that’s is to the see going

Operator

from The MoffettNathanson with Craig next ahead. go comes question LLC. Moffett E Please

Craig E Moffett

you a about stay just question now them? How having Steve. And What with of acquisitions second you willing will can your operationally? think had of – of do you I that kind with acquisitions off? targets to find maintain? to currency? capacity who frequency think able success for do some How this you of the kind Assuming are be do you the what a think you’d to size pace take just can do and it string bite

Steven Cochran

asked is of is I question think what the Well, first most available – when. the as part you becomes and the one part part relative to yours the

of bigger be deal less all total because learning. company. of better do and get we’re to what able will And just think we we at I it capacity increasing time we the because, become to the more the sizes have get an

So to our families do. opportunities or present standpoint be assuming I based themselves. equities things on not think that to private control our are pace decide where other from these increase should things in that that lot able or of there’s A

for pounding That payment to thing and the we Cable won’t the next doesn’t find try be One. mean right

And what of like so do. we part we an – it’s yes. It’s important feel

that and able continue bring is the and of like. Our we’re think base our to that side into and and we’re more what business, they And execution of execute very successful at the we business so core. go we base – really being are thought to operators I in

not So we incremental we as what plan. definitely at day. plan is on every look business The the this business execute

Stephan Bisson

point? that a be larger proven do at sense to with ones model – size there this relatively deal larger at to And now and smaller is sense done you’ve a a could that something you point. Is Having this do acquisitions? able the that there

Steven Cochran

fits think Part I where can doesn’t in and figuring business test and out about more the company. day. it it’s every what deal at of we they’ve we take it day nice we is beauty how size the done to of – looking what to probably each we’ve and get and our into it apply, it interrupt a do running doesn’t been can

I And year where stand does we, an plan? think it we capacity figure so we into will those the always be pay things. definitely fit do it conversion have debt organizational going Not have how could it of ten to what’s out for kind But quarter. our and to the next

Operator

question ahead. next comes go Frank from Louthan James. Our Raymond Please with

Frank Louthan

Great, thank you.

Thanks. Are streaming native your wanted just touch on how of with put rate those? And you’ve lower Just about you What’s your others? on you marking promoting on got some And broadband curious any feeling priced pushing like products. with the take up current Netflix those? services setup platforms then Are any on are to boxes. what base have there. various the you considering or adding you

Julie Laulis

Julie. its Frank

of call and service XXX-meg get Our what up do when We a very market level price lowest-priced to that next the in, levels. into it, the we of is has take people what is find package broadband level which people very seems low package but draw next starter low to package. the for rates, value, the you levels

tends So though the we be very to market low. rate it, even take

have spend really with boxes, served video, marketing be our people service. don’t worked of our connoisseur having terms any platforms like setup In that we but a on marketing to said money we training

about, service suggest like cost are OTT we And platforms customer thing they with what to So will them we to for and looking talk the them. watch. are they they if if calls will maybe for of video in, or a frustrated particular

office if ours. and for be In have it our advertised so that the you video can to our might into that you them is several see doesn’t that into and of go them be for them, city example, had best fact, in helping service direct associates to lobby with the works conversation a

Operator

The Brandon Markets. with Capital next question KeyBanc comes from Nispel

Brandon Nispel

that how Cable for Legacy if And Great, would like then growth question great. Julie taking to the you are could to And that that Fidelity And you. look will you One? customer the maybe What take thanks think make Okay. about you the one from be take? for do questions. then rates for long Fidelity need talk steps Steven.

NewWave to from Thanks. wondering wait And I maybe synergies could And if what was do then mentioned programming, more you You that Fidelity about have dollar synergies amount. you immediate? what talk for? a are

Julie Laulis

Brandon. Thanks,

at three look was fidelity that is take us. for if the about approximately a integration you of Fidelity, posted deck And period an fantastic we’re time years. For a acquisition talking

that do we the things with will very do similar We NewWave.

on be and coming spending be time We’ll learn practices a with with will from ours. network best with working We way doing them new of integrating things. to up their CABO them

their on work those will their three will and margins having ours, match ours, match We ARPUs ours. revenues match all years. costs their take about And

their I Thanks. go terms growth In to right don’t going place of I’m customers' think that’s now. the rate,

Steven Cochran

Yes.

me So your synergies. – the on to Brandon questions and

timing to. what We’re of not come it that that a that, going most amount executives. programming on the more than that spread total said this of last that towards say within three what we the it’s combination kind relates the other realignment going of one were is kind realized we us handful very we There’s the that, the to the And felt of give piece really to years. as came to of over Fidelity feel we senior comfortable from had to specifics synergies. that that originally we from than it savings And guided

close. after syner that on And place own that. their come that savings from Moving right took and realignment programming

or will to as then we from changes to and related. system whether the And bandwidth a starts contracts ours it’s a insurance the rest of and as amount is overtime move practices of able company those be we roll start and things on of they do standpoint that’s what to the kinds there. or taking of of all make best do, it decent there So – from basically it whatever forward happened

reasonably happened And savings come in the October. so with over the at that start say a they’ll three off some with bat beginning right even I of that would kick initial of the the decent right years

Operator

I to remarks. This conference the back question-and-answer closing would session. like over our for to concludes Julie Laulis turn any

Julie Laulis

of and our to Thank with us quarter. today’s you in all speaking everyone forward to look Thank Sara, call you great another again want I associates for We for joining thank you. appreciate XXXX.

Operator

is attending for Thank conference The now you concluded. presentation. today’s

You may now disconnect.

Cable One (CABO) 9 Nov 192019 Q3 Earnings call transcript