Earnings call transcript Q4 2022

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Operator

Good morning. My name is Devon, and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest Fourth Quarter 2022 Earnings Call. [Operator Instructions]

I now turn the call over to Olivia Ponder, Senior Manager of Investor Relations.

Olivia Ponder

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

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

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

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

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

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

complement this also a included prepared remarks. We for morning have to presentation our

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

Teresa Elder

execute long-term we with executive the progress our post fourth employees it. In record Greenfield making call. we implement sale earnings from deliver and quarter, XXXX, vision results to team industry, for year the strategy. WOW!'s with the significant for we I'm plan asset Welcome our adjusted growth Olivia. commitment Despite EBITDA expansion difficult to our began clear to board, to pleased this a Thanks, as quarter a our and execute especially our and are

strategy The X on key growth expansion, business. elements profile of elements Greenfield grounded Edge-Outs. based in of leverage Services low growth; maintain as our And to our our and commitment are are pillars Business a these our high

revenue the as Video Our data total year. revenue in period increased and from X% last respectively the revenue from last X% and than declined Telephony high-speed fourth quarter nearly XX% X% more grew year. same

million, margin high post proportion EBITDA Our post X% by to high-speed of increased record increased $XX.X adjusted a XX.X%, was quarterly record. sale asset EBITDA also The revenue over asset margin data driven a from business. sale an adjusted our

For EBITDA sale in revenue revenue the more adds respectively. increased XX% declines year, which Adjusted was and our last Telephony full declined dropped HSD than year. total from X% a in XX% revenue, post X% by and Video X% asset increase offset

The X,XXX with approximately subscribers of total HSD under our the RGUs, just high-speed to fourth total ending during lost the During data the quarter, HSD our XXX,XXX. number reduction drove we also subscribers XXX,XXX. in decline quarter, year bringing a RGUs in nearly

high-speed Our to be operating our strong. continued metrics business for data

of X.X past are XXX quarters, new with data gig offered of our XX% including tiers approximately core approximately of than more metrics the purchasing customers figure our quarter, Also XX% consecutive HSD buying with or higher. an quarter, with service. higher meg, speed further higher above XX% only, adoption customers XXth average the we taking consistent financial For speeds strong recently driving maintained rate sell-in this our reaching

and quality above than XXX our demand the more reliability of the for of faster and quarter, speeds higher have base and which network speeds. XX% our This superior meg, strong demonstrates

increased HSD to $XX.XX. the during record a quarter ARPU

of revenue. revenue million previously HSD deferred included $X.X Our

of would Excluding higher cost during as we in rate and as ARPU we were quarter. effect buying $XX.XX a the which that We data see in in ARPU revenue, to driven increase, and the believe new activity purchasing fiber HSD was well HSD still took speeds. customers offset Edge-Outs. continue higher Greenfields as increase existing be speeds October customers record. both will ARPU These partially increase by markets, promotional as continue by customers a The add

Our in and in homes quarter in to Edge-Out vintage XXXX X,XXX our we another nearly drive growth, especially continues to strategy penetration that increased passed fourth the our vintage, XX%. where

vintages and and rates remained with XX% respectively. XXXX constant Our strong XX.X% staying penetration XXXX also at

believe Edge-Out before, growth performance quickly our our engine markets. in remains the business. our markets As we've further our for those strategy of supports in in strong a we new said ability grow confidence to And

in In been fact, year really earlier beginning this in our an initial great also and progress rate Greenville in construction XX%. we we announced above expanding where Greenfield are first market Central Seminole construction in We're Florida about our while have January, South and communities, penetration in we additional Carolina. County, initial seeing launched excited have traction County

our provide progress call. will We specifics on more our next on Greenfield earnings

Edge-Outs to Greenfield reception, ARPU. we higher increased all-fiber seeing and contributing also where we've passing In both addition announced homes and Alabama penetration are fiber-to-the-home to in our new strong extremely expansion, new

before be a Edge-Outs, to to entire additional reflects quality across markets, effort the company employees I expanding Launching to the recognizing our and high delivers to lastly, customers maintaining like a our I our strength amazing on as of minute And discuss the importantly, to demonstrate that dedication WOW! recognized results, spend in workforce. over and a place basis. continues our would a through all service footprint the new that call reliable a our great and infrastructure hand work. John daily financial WOW! to

the For as as fifth the Denver Detroit. Work named have been in For in well Company in a Nation time Brightest and Atlanta, Best to we row, a and

particularly strong. and We're initial in business. strategy of the fiber Greenfield returns executing remain strategy Edge-Outs. are aspects excited our core and growing our markets The our we new about conclude, To our

increase penetration our rates. to continue Edge-Outs Our

making is Greenfield Our thereby low we our cash maintain importantly, from of all are doing leverage to this with profile. enabling real And us operations, expansion progress.

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

John Rego

Thanks, Teresa.

are delivered very margin adjusted We work post macroeconomic with Through proud of record-setting we this financial team hard year. execution a backdrop, results sale. EBITDA of asset our the and challenging solid

the to we such brought progress X.X offerings and and our as quarter, made on This new gig Mobile WOW! initiatives. Greenfield further market

adjusted The guidance of on adjusted quarter results, as this to we sale. the change, pro financial and EBITDA forma. Before the released year EBITDA we Due like on are EBITDA to SEC term fourth updated use post pro term. adjusted into I'd comment full get referring the our asset to now forma updated

In Loop. high-speed increase Fund Connect respectively. quarter, revenue quarter and data million the of Alabama, decline X.X% X.X% $XXX.X recognition the the requirements fourth HSD and attributed Broadband included as part Telephony total to $X.X in completed a America and XX.X% in network reflecting construction a Valley, revenue in improved of to revenue revenue X.X% million, Video fourth during of the the

quarter only accounting Valley revenue though the of realize over of Even standards we will revenue the upon the period requirements. part project recognize the program. revenue of as the a approximately build-out reflects $XXX,XXX limit per completion go-forward network time, of On of this us to completion basis, a

speed a HSD higher of deferred existing which revenue on and Excluding reflects took portion the base tiers. X.X% new notably, X.X year-over-year. the speed $X recognition effect has XXX% as a October increased seen buying customers of rate subscribers our number increase our gig in quarter-over-quarter. well revenue, This tier of in increase, a increase as Most

Our year date. the service continued revenue. of for in initiative highest asset The $XXX.X million reserve now providers. revenue $X $XX.X the our of as achieving sale Adjusted EBITDA for prior year's X.X% year the to nearly XG throughout revenue period million spectrum revenue revenue basis, as On XX% last grew reflecting was part year-over-year, level full million, to from $X.X the of $XXX.X our grew million. from accounts revenue down total HSD to of million year same shift in a FCC revenue of growth mix total post

are continued margin cash year-over-year, flow points base margin to the sequentially broadband-first XX.X% million is seeing the the EBITDA increased as contribution grow we as X.X Adjusted in X.X% see demonstrates of our in from our the and asset incremental year, generation. contribution EBITDA percentage strategy. by a our the by HSD-only. grew to We period year-over-year sale which adjusted $XXX.X post shift metric asset post and same free sale margin of importance improvements success consistent favorable result strong with driven this last Incremental it of the of

the of update following Now our on five areas. alignment progress divestiture cost the service structure for a

of of environment. represents the few to the the progress be these made $XX.X our identified savings fourth years. on quarter, as next to tremendous million. XX% the diligent $XX.X higher continue costs we equate million inflationary we cost despite realizing for This As We've we'll savings and reduction over manage approximately

of up of $XXX.X ratio quarter $XXX.X reported is our million, spend which total $X.X of cash with leverage total which the ended million, capital debt total We and year. from million $XX last annual million holds at outstanding We X.Xx.

Greenville, the future improved CapEx fiber Group South Carolina. as basis Central growth to heavily to million annual increased Florida an XX.X% efficiency we continue of Our homes bring X.X% and our core in CapEx to $XX.X on and invest and

we year. have more very this our seen new look offerings data fiber far, forward So for rates to take encouraging providing and

results free less which growth in up as $XX.XX driven XXXX, million of sale. sale average Looking from repurchase as right price share. we million post last primarily shares, the repurchased undervalued. In at quarter, the year, approximately side we million at stock the X.X by program announced define adjusted increased we to XXXX an we adjusted cash of believe a million asset $XX post unlevered Last we slide, $XXX.X flow, totaling million, adjusted are asset EBITDA $XX.X CapEx, significantly for $XX.X per EBITDA our

outlook and to full first Finally, the open for for quarter before our year. I'd questions, the call like we provide

$XXX million between HSD revenue between quarter, adjusted and to and For million. EBITDA XX and we the million, be first to $XX expect XXX to total $XXX revenue XXX be between be and

to and X. We also expect between HSD negative net additions be X,XXX

be $XXX Greenfield The between we to $XXX to includes additional and between investments. total XXX For related EBITDA be and upfront HSD expect our adjusted adjusted be the $XXX to year, revenue costs and full million, XXX full million. between and year to EBITDA XXX million revenue

with to to the add our fiber back year in to for year the add home passings. HSD majority coming RGUs of we X,XXX XX,XXX as more expect We the between the half

was very and WOW! another this for closing, environment. year solid in volatile a quarter In

and our a customers to we shareholders in strategy, to hold forward bright our growth our delivering strong, conviction future ahead. Our our and prospects commitment and look

line for the up And open we'd questions. now like to

Operator

Kutgun Our from Instructions] Capital Markets. first [Operator question comes with Maral RBC

Kutgun Maral

want interest, in anything QX you And else trends. I in to broadband ask two it's confidence expand first your driving in questions. just your greatly provided XXXX? but XXXX, driving and Greenfields CapEx, contributions have know to on beyond the coming I the at expectations Edge-Outs, improvement I would drivers on call know be for about what's the subscriber growing range free Can for you flattish? out? Presumably, to October losses guidance bit balance a providing there's I net help picking flow Is it from any on appreciated? don't peel X,XXX of rate you inclined cash or if competition, you're the onion color working but on think cash EBITDA, maybe specific I increase? the And what's following not for between perhaps cap macro the could up churn

Teresa Elder

take first I'll flow. part, have John and free pick with the cash Kutgun, the up

things think in especially some we to feel trends fewer movers, subscribers. at do inflation, in ability were us execute, some absolutely impacting We are our in with with what we I interest seen of uncertainty forecast some quarter those well as So certainly still still rates, we've fourth are with as prevalent. our the seeing look confident that

is last that have believe us do though customers through. largely quarter needed and financial that we about assistance talked wave that I moved behind the of those

We promotions. behind now rate did, us. the seeing and are that's we increase mentioned, -- a fourth quarter we as continue do We to in

So look I bit better do first think quarter. for things a the

exciting. have at had in low I being Certainly, biggest do you about piece the areas is great We And -- extremely is to penetration. Greenfield customers That's we've we had the continue with why bringing on new tell first already be Edge-Out decided customers our to and success to the XX% churn. these Greenfield very the loyal. market

the will Now denominator so we the of down it to we very, so be can't always go strong to fast that passed, homes far. and increases. that say results will adding But new be and get encouraged homes up as we're we'll that by very passed

that's the but we're for also caution seeing well. environment, So optimism with the some uncertainty in what some as

it With free cash second about turn John that, I'll the to question to answer over flow.

John Rego

free So more flow, review, you we time, could cash on what please? if just were asking the Kutgun, one

Kutgun Maral

sense of flow Yes, I a get to components to to as XXXX. we of course. turn cash was maybe better of just free page trying

You so taxes Any have if that, didn't relatively anything EBITDA, working we guided if that I more around of know of. capital mindful kind will we don't more we work you the anything know should zero. the could CapEx. be color cash with to through there's still cash around interest. Greenfield assume I be And -- so specific I as nuanced there's process but

part in be but Sorry it would for nuanced helpful. the questions,

John Rego

color. worries. much I you won't too No give

I you're in -- way. start a the for expansion to think see see to what we'll on is big going that CapEx change it's CapEx So

you're XXXX. So CapEx sort a I see of of think to shifting going shape for

or So money is on going Business and also Edge-Out more to activity be and Services includes commercial. it now spent growth includes which it Greenfields, course, more of also includes CapEx,

of to is get bigger a number going that pie. become the So to piece

up about we're the and for down capital for talking like was remarks, the efficiency In growth. prepared core

So variable expense, in interest interest that you're mean, to a cash I Interest we're continue happen. now. going world to expense, see

going big going pieces. less So up, still it's and but less up

And in it. cash we to So flow had to all cover even did capital that of that enough cash network. XXXX. interest we generate than to I free expense to plays do we that the see still crystal to we'll wish ball able expand be $XXX-plus we'll still, more million that predict have the for and think stuff kind I And out. want to where But

extraneous So there for nothing us.

Operator

comes question with from next James. Raymond Louthan Our Frank

Frank Louthan

the you expecting forward little color of that $X.X covenants increasing on have And give the more million left today that couple the you going any in Is revenue over or year Maybe much outstanding recognized. going can a deferred subsidy time? is you're the on us Just of revenue full you a any QX clarifications. there then there quick that guide? And as buyback? how bit restricting are

Teresa Elder

want to think the you about subscriber I do and John, talk $X.X revenue it's million? that,

John Rego

Yes.

work, in project the until not -- the it's So that, so the can't accounting these Frank, the someone are until type we And on way these government but recognize government completed, are revenue completed. rules says the is projects. only

So it sits in a deferred revenue box.

the get we influx big So whole on that date. magic

little the we if you'll you that bifurcate And about million, the $X.X of schedules creates revenue a to it the have that time. that's our we we but that. do see built. So an to try had ongoing to C-Band. with called from year, the time see, is entity look by Last you earnings call, now stream accompany that's we graph caused at so one an that can bump those project quarter $XXX,XXX And

piece. that that's So

second the then on of part And buyback. was the the question

the shares $XX We did of buying only around totals It million in November. buyback of $XX started back end year. we the through So million.

plenty we capacity in level. through we $XX out working get to our of So no covenants the $XX start general that as we do still restriction it revenue the to million can't XXXX. it. There's It's of certainly have million

takes us. So where this we'll see

and take people is a Our of some it stock us lot a undervalued, belief for is still the perfect undervalued that time for to like seems back.

doing. So that's what we're

Frank Louthan

year end $XX at outstanding today? update is the Can that of give available -- still an how still you of much us on was that is the at million

John Rego

Yes.

we $X into so QX, So another about million probably did far.

Operator

with Levi comes question next UBS. from Our Batya

Christopher Schoell

intensity be Greenfield do finer years? continue wireless fiber Maybe a prepared have from or This for going put some in to in legacy from you're is just you broadband of Batya. to remarks, coming driven point impact the And And on footprint? peers? seen most new growth footprint the your any you will what by your maybe shift believe in seeing fixed in your competitive forward and will the backdrop, with markets starting Chris your you expansion grow

Teresa Elder

fewer up since there customers So as the really board. intensity are ramped year last across available the has think I competitive new

I as quarter first going So been we're into has maintained that think the well. as

we competitive is sure to and little a is our promotional So about activity that a bit We there continue make that are speeds our that as we with talked reliability. generally lower than certainly higher pricing well with others. and great competition

does So we do that's resonate part that the of along promise our customers. marketplace. just that with well with And providing the just choice brand within

remains churn so Our low, very is that good.

rate We footprint. tick-up other launched our about not having some what's across X the we interesting the the product and footprint. our X.X been was growth. that up has whole which some expectations. been gig competitors ramping are it year, beyond far our our our there's on seen technologies fiber in also into have increasing And product fiber take we service, is footprint. our as that gig And legacy But that of in has eaten Last speeds product growth within

have continuing In have fact, both to been growth. steady

So we feel that. about good

So continue very to extremely extremely the we But strong Edge-Outs has legacy churn to within Greenfields and footprint footprint. great highlight service grow opportunities growth been with maintain rapid. excited the some and within where to and we of at our are legacy look our low

we service. have customers So of we're as the offerings legacy receptive seeing with to our well product that as great

Christopher Schoell

just maybe follow-up. a then And

areas about over starting in I believe multi-year Central can XX% can to get in these a cited With us ultimately these you the online, rates And in the but thinking you the maybe Florida, markets you just on penetration remind initial come Greenfield basis? penetration do you're locations where how long-term? you recognize

Teresa Elder

which operations. And own our our cash we're completely is way thinking we markets. than flow, own when back able a by of to time, penetration ramp was talked some about We funded XX% first free tracking I of more that Greenfield over model course, think Greenfield, in being year. introduced to to for Well, period new a our

So but customers quickly with are with starting are from granted received thrilled Florida homes pleased passed, we've ramping from welcome the XX%. and a encouraged. that very the we of small we absolutely that to We're and this of footprint that Central

markets look but we for can I what at know of accretive don't we very penetration. us Edge-Out that is. will the ceiling know XX%, these our some So to be

the in those vintages XX% range. Some up are of XX%,

good about the very feel we resonating So our chosen. that in we've are markets how products

Operator

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

Daniel Day

looks it XXXX guidance ARPU about the the to under Then for your assuming first $XX. for full you So flat think in just like you're getting year, HSD ARPU, guidance quarter ARPU roughly $XX. and implies the

So be in I it above would back that half. assume would the

what in maybe You little wondering about a bit Just higher. expansion? talked ARPU that gives being confidence you Greenfield ARPU

you would about what just legacy talk for the like thinking if between that the be versus in could So you're markets maybe great? Greenfield, ARPU differential

John Rego

Dan, John it's Rego.

is coming we've on So tiering the still higher up at in Greenfield business far, are is what's happening And seriously seen base interesting the business. speed in so folks tiers. that

proportion And offering. has XXX taking offering, have I'd meg. say, been gig the X.X a gig we Greenfield point So of X for far folks taking goodly the offering thus low

So it's higher really ARPU. driving a

second of that that's mean, reason reason. And now base. the or I have one business. tearing XXX like continued we're base meg So majority in overall up more the is

ratcheting the comfortable up still we feel can we keep So number. that pretty

Daniel Day

That's hear. good to

back M&A in you of fees non-recurring I the there go that's all that to related are 'XX, EBITDA great. adjusted would any and relative professional color integration Maybe to to on just Just do going that. directionally where be think 'XX? just maybe think added so And to

John Rego

of projects? the Are one-time government about we construction talking sort

Daniel Day

Yes.

John Rego

did in They are We it 'XX. not for 'XX.

Daniel Day

added EBITDA, to That is being back right?

John Rego

sorry. I'm

is gets $XXX,XXX revenue for and about until project of quarter all it's it's The was so out that build the it Valley, building that we in the a we'll recurring now project get got So for completed. you payment done. if big the actually and deferred

Operator

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

Brandon Nispel

your you Day. growth since far thus you hoping talk about your outlined could was at I Analyst

hoping getting EBITDA -- if level revenue and looking then. back back longer are your growth been targets no talk total at you what outlined not have all? HSD I that achievable? targets, And about below those was to your you should in had could be those confidence expectations we far for Your if

Teresa Elder

mean, lot I changed. I think a has

it recall, was we Day, As think Analyst December did I X, our I XXXX.

since industry. that taken So have a then place our has and with whole shifts really back lot happened economy across the some

So to put is trying estimate guidance what gave for out our and we remainder figure the we of definitely the appropriate to you are we the best give, what year. in forward

with to opportunities, like opportunities at to attractive continue And we tell grow are, excited and pleased like deeper I as we're by in within variety but legacy technologies the can that new our but I things we're a footprint well. very are to MDUs, just of not very looking fill-in be also Greenfield you, said, Edge-Out opportunities seeing areas

feel So that our yes, have changed out had good ability to about put numbers we December. good feel we since some We things And about. execute.

So longer this model, term we're just in for this time, year. terms an giving at the of estimate you

you'd like anything the to from numbers relation is guess, Investor I John, else, to add Day? there in

John Rego

bit. mean, going modeling, look, now. the We're we're somewhere is nature down an I to updating. can multi-year of a living we're pipe. probably And the change No. it's of the dramatically, we right going And everybody little to bring but change Brandon. place in more initial the not From update probably my world that's that going adjusted to to constantly it economic

Brandon Nispel

with I terms was some outline detail we Greenfield more could for 'XX I should you new if And hoping follow-up could what just expect passed? on of guidance. in homes

Teresa Elder

design from not to a that construction of go of a of laid thousands all permits we're and walk-outs and and tell number, has significantly ramp but attachment year. lining going this into I terms things everything putting and out can in pole thousands needed of in A lot system been it's and the we poly point, build. XXXX, what you groundwork this At the

in setting for in growth done so us XXXX, of the well and much work XXXX. team of that for was I'm So up proud

of on to new we've in more a Greenfield. X been of calls So we've that detail excited how you've you weeks or in to we we so what more providing are. future taste wanted to on seen that will gist first We got customers be the And give X come. adding

to come. more So

Operator

to this now the call There are at I'll remarks. Teresa time. for no Elder turn questions closing further over

Teresa Elder

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

WideOpenWest (WOW) 23 Feb 232022 Q4 Earnings call transcript