ATNI - Earnings call 3 2023 | ATN International, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the ATN International Q3 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Justin Benincasa, CFO. Please go ahead.

Justin Benincasa

good and Kathy, you, morning, everyone. Thank we'll morning, review our results. XXXX quarter third This Michael Executive ATN's Brad joined Prior, I'm by Chief Chief Officer. Martin, Operating Officer; our by and and on Michael an quarterly the a high-level business results. will overview update and provide our of strategy our color necessary, I'll is financials and provide session. questions-and-answer for and Brad additional cover where here

Investor As yesterday earnings market our the can find website. afternoon -- presentation we release Relations closed. our results quarter third released reminder, after a results release and earnings press Investors on

Our and our forward-looking are useful today information measures. expectations, results. an earnings differ uncertainties presentation concerning statements our to from include investors, contain non-GAAP to statements financial results and materially release and in underlying effort the those that to our current actual Also, comments could subject These future provide objectives to risks regarding cause assumptions operating described.

measures For to provided website for the or filing information to regarding and prepared details call to operating the turn over I'll his at on the please the measures may remarks. future these Michael comparable on to now GAAP X-K our further earnings our release for results, that and factors atni.com reconciliations SEC. affect our refer

Michael Prior

XXXX. thank Thank completing our rapidly X-year pleased as you, we networks work towards Good convert high-speed and of you morning, continue customers third plan quarter for and the Justin. joining We're to our us. everyone, with performance to end our at

X key by from sharing me Let performance. start takeaways our

of XXXX. solid First, first months quarter growth the we higher in and fronts, delivering revenue and continue execute subscriber EBITDA on all to well on X both

remain foundation shareholder revenues, discretionary to spending out third, maximize managing balance final and levels Second, we value. in approach of to plan, cash our flow our the for infrastructure over provides building made time. we long-term X-year the durable our we've cash And year the committed free as sheet and flow broadband recurring strong investments network

rural years X platform and high-speed areas. delivery and ago, our underserved of Steel ambitious in strategy we and data Glass launched services primarily accelerating So consumers First-to-Fiber to the businesses,

our third the the reflecting and team that accomplished in And and of our operational proud has plan, objectives. milestones quarter towards results financial year-to-date those of on context I'm

financial metrics. will achieved begin on I'll robust highlighted our high-speed an We update our growth of year-on-year, operating but broadband with results, markets. by international from contributions Justin subscriber provide XX% our strong

we XX% on Additionally, high-speed annual At to continue enterprise customers. reducing subscribers. a rationalizing increase progress the mobile to time, operating government and our data legacy In markets international making U.S., expand rate network our in saw and our are network subscribers to and we same the reach costs. run

planned. and these Mexico. base, expand United pace by capital years, next our $XXX were wireless Alaska, Nevada awarded and to grow than previous self-funded funding We connect XX as over decreased network million the months additional way recipients including in the potential customer to more sub builds Arizona, underserved the our of of grants fixed in high-speed reach and fiber rural internet our areas follow and $XX are to network rural us our of tribal will over program extend to on grants of and expenditures expansion the for and federal States, the the New recently in The us and and nearly areas These to network for in people brands subsidize recipients networks. revenue likely parts grants paving high-speed funded partners several even or million as the

and the of and ATN, about are new who rural principally you both Southwest West rural Alaska. half from areas revenue of U.S., of to those urban for we in customers our in from And derive the communities and

and Based Guyana. opportunities We're a from our to rapid the in some subscriber of encouraged The our of capital growth broadband. on fast-growing and uptake we comes Caribbean, the the strong and other revenue like about markets Bermuda high-speed half of investments, the to markets dynamics are value following mobile our seeing ahead. approach across long-term our the quarters maximizing positive and years

all directly higher into world's of for secular connectivity to data play what need high-speed the accelerate. drivers, only And be anytime the connections. is going at is is ATN We one connected everywhere. about and the growth durable unquestionably to that most increasingly demand speed

will consistency only drive Our you, Justin. greater And with I'll an now as advantage the assets long-lasting essential provide efficiency ATN network's towards benefit connectivity the back and reliability, continues. competitive and to us hand call that

Justin Benincasa

Thanks, Great. Michael.

be that we've we'll some the be website, accompanying financials to along our can found call reminder, additional in a tables. our As financial added mentioning during today's presentation all slide with

grew we've to revenue a revenues past steady million, by and followed contributor ATN's in few network result broadband mobility. X% carrier top growth, highlighting to momentum our our of the as Fixed built strongest was services $XXX investments the QX line the years.

$X.X Adjusted $X.X year. loss prior primarily grew net to million compared $X.XX in million million income. $X.X increase million, higher $X.X in driven interest performance million to businesses. net by or domestic by grew strong a expense share The XXXX. loss income increase per total loss operating in the net QX Operating of The the million offsetting $X.X quarter P&L. was $XX.X in $X.XX the of quarter from or in down EBITDA a the per share driven the our for to in was XX% $X.X Moving the million

high for were while quarter grew performance million, segment X% expenses International sales of the helping drive nearly the and reasons down The resources number in growth. $XX.X for to revenue quarter. subscriber of including the addition stronger the slightly segment $XX the support the Operating EBITDA are revenues was that to million. a adjusted segment at unusually Looking for

a categories, expect those We also down few coming the expenses costs regulatory quarters. in saw in elevated and fees, we will including operating come other

XXX,XXX For the high-speed exceeded growth. while international mobile delivering first strong time, we subscribers subscriber broadband also

on-the-ground and our to network. increased by operation was the helped support are investments made the As on I that upgrade mentioned, expand capitalizing subscriber we've growth

up department Islands. Virgin from was the as by COVID-related expected, resulting down of the temporary the in the churn MiFi in wind quarter supported program the Mobile education

X% the to fund Revenues and million million Wind. enterprise quarter. the emergency The fixed in Alaska service by of Domestic acquisition connectivity the grew increase or and to reflected revenue Turning by increased in $XX Sacred carrier of growth, strong segment. performance revenue $X driven and the

this was reduction XX% The was $XX.X expected, revenues EBITDA in As roaming driven to construction reduction legacy rose strong the million segment higher Adjusted by EBITDA nearly million. performance initiatives. ongoing slightly offset in $X a cost by revenues. or several and and

structure support the last and is to overall business ATN the in quarters, the the operating future focused into mentioned we As X cost improve on margins. rightsizing necessary

decommissioning As in $X.X and mainly and $X.X force the we million expenses. million a a result, recorded reflecting associated restructuring with year-to-date, costs reduction in network cost quarter

We costs our any expect into anticipate of XXXX. not further to the review be operational complete majority do restructuring and the in quarter fourth

expenditures. Year-to-date, spending September and million. at We're invested $XXX.X capital costs, be million, million now $XXX and on with $XX.X between First-to-Fiber Looking track our CapEx through Steel we to strategies. Glass net $XXX of reimbursable and within XX, for guidance million XXXX consistent in our

in Lower continuing which CapEx to $XX.X XX. fiber Within spending related million deployment QX, the U.S. million. in the in focused was primarily was $XX.X segment, and Alaska Internationally, expansion was on That CapEx fiber spending QX during the Guyana.

afternoon, outlook. yesterday news provided In our year preliminary XXXX we full earnings issued release

anticipates into expenses. $XXX we million outlook and 'XX increase of CapEx range adjusted move million. cash investments range adjusted reimbursable $XXX a network our million EBITDA, The a anticipates million XXXX. Consistent CapEx spending slower preliminary our EBITDA of to of net guidance, to will Our increase pace in between $XXX preliminary $XXX the flow free guidance combined with as in with past our is outlook

expect slowing and expect expand grants we XXXX, revenue our to of rate is ultimately and investments our expenditures its ATN going network receive will down received potential. into network While and capital reach extend the we further

with to cash and equivalents net flow $XXX and end ratio third At outstanding the provided other cash to and Turning EBITDA $XX.X million at million quarter, X.Xx. cash debt was quarter and our debt balance the activities We of year-to-date. was the by consolidated adjusted cash our ended $XX net operating remained total of million highlights. sheet

move I'll we And to flexibility. ratio to financial Michael. As cash, XXXX maintain a into that, back expect free expand it we and and hand with leverage healthy

Michael Prior

Justin. you, Thank

mobile Our business our beyond. excited and across front us as place both the I'm we good us. broadband a areas of of look in in XXXX opportunities has performance the final quarter and about the towards of

and and As and First-to-Fiber planned, Steel recurring strategies our adjusted our Glass growth. contributed EBITDA revenue to have

the magnify we focused higher executing of the which on As to opportunity flow levels. the cash incremental normalizing developed, of spend our on margins come and operating XXXX, should revenue growing margins, down as we subscribers expanding expand bell-curve the have the and investment we other free capital we and side move at unit are closer benefit

to a in turn investments fiber tail, the And strong cash long delivering for you, have the sustained expect years to questions. now operating line it come. open back operator, to We for I'll to particular, flows

Operator

first will Instructions] with [Operator question James. from Ric come Our Prentiss Raymond

Ric Prentiss

of A couple questions.

you're in the as always of and your Help what what are about you're And us that? preliminary helps. what what First, the visibility XXXX of far understand about. guidance excited giving appreciate level takes is as puts kind concerned and

Michael Prior

be I preliminary, good I pretty think given think range we think but that, last is to tight mean, relatively answer I and first. I will it we part the feel about and puts we a our are about volatility. if feel pretty a have takes of didn't of portion lot is a that The not we area. just revenue landing we if recurring, huge naturally recurring good in feel

kind the are puts and So of things. takes smaller

$XX we've side. contract the expire into in to a sort example on expire And COVID-related the of side one scheduled we of taken first contract the end going about know have have is annual is at the million that or that quarter. be account, that We negative that's U.S. we would to that

organic On the say continued continued And in heroic growth and but it. pretty the then expectations any would not that, rates I positive kind means. the of we're middle down our of in by right on subscriber revenue back side, it's confident growth of the terms on

Ric Prentiss

Okay.

provide since revenue it just different recurring. on when well just the that is? much revenue, wondering towards so margin, the guys -- revenue you're you is of don't that profiles? Speaking can Any Or thoughts a have businesses guidance. Is managing guidance different why as on

Michael Prior

CapEx, most to which cash free didn't flow. which on things there's Yes. moving. on It's number, focus leads easier to We EBITDA, leads is us important which I a the think because lot more

So we're there. it focused really

think said, -- example other think been revenue -- I growth I similar than expect -- I gave, one see at than we rates but So that I experiencing. as to don't you of kind of I what we've kind

Ric Prentiss

the And COVID-related $XX contract was million that in U.S. that

Michael Prior

annual Yes, rate. yes. That's an

that of fall X/X year. basically next will So away in

Ric Prentiss

Yes.

like really kind -- free EBITDA cash free obviously, flow. do we simple flow at CapEx of And cash Okay. minus

want you where the run think Justin, we long-term you're versus leverage at? at to to the over you leverage. X.Xx mentioned healthy Where do mid-

Justin Benincasa

goal going goal will driving some think to But I cash right? leverage we -- X.Xx just flow long-term Xx driven by Xx. of by in down the our growth keep down our to or other it's be still be get that's level can and free So from closer in driven is it is range, EBITDA. that to to

Ric Prentiss

should to about usually you're we up financial where And hopefully Okay. go flexibility a flexibility dividends, think how which M&A. stock thinking or tee -- as might think we stock just somewhat of are obviously, illiquid lot How seems buyback about shareholder financial about forever, returns.

Michael Prior

Yes.

deliver it's primarily time shareholder and We've M&A. the to been that. side to a lot in we're of investing think on focused as the sort business opposed on I

existing I think of year, $X.X have us the and XX, had $XX I about at million that buybacks, at this think we with nearly program. million on leaves end were September, through in would the September left we stock

and at rest. kind So typically, dividends, timeframe other sort allocation of will at look and sometimes buybacks the all in of capital December Board those decisions, times, the

Operator

go This of the with Burns this one of to another just line or We'll question comes from the question question Khorsand with comes from Greg Hamed moment Financial. -- line BWS Sidoti.

Gregory Burns

margins. I just questions of had couple about the segment a

higher about structurally apart growth. of international saw this you side, from kind for some that sounded to First, increase those what Could here? you It with like forward? spending Or break maybe some unusual was on going was are spending and quarter. kind this margins maybe business think is drive just a the you in to of expecting to the good expand -- level

Justin Benincasa

let We little are color I'll more on maybe you Brad, margins but give expecting expand, international. a to

Brad Martin

Yes.

[ through And fixed margin perspective, a existing from with to subscribers cost-based revenue on expansion So CSL combined that and the margin Mobile. we'll grow networks, continue Legacy continually and we been decommissioning we've legacy have, ] assets continued investing our of adding in.

Michael Prior

I'm quarter related and side, was it like things to -- the bringing was the some just we're think some but regulatory not sure -- most recent I we on And the of sales on those down. answered of you focused what costs fees

Gregory Burns

think run of like maintenance $XX to because guess or heading CapEx on current past -- I And I annually fiber we was rate about it's a think next good million the CapEx get that embarked to think is Is you CapEx going over the is Okay. we just initiatives. maybe to closer where how million, now $XX more of years? steady-state XX, where level once Alaska have be you higher couple before should

Michael Prior

Yes.

the embarked right? top XX%, if been think we the recent you of which look these think I running we sort as of as what percentage in we've think years I programs. it on is of a normal revenue, range end above -- well we've call of And would been

not expect move XX% point, we the a direction you into trying at that down but this think it So to would I range, to to range travel. number only that's not move the of but give start on

Typically, below expenditure. course, cost, after that a period it a is has investment rate in And after of of the long technologically excess, part individual XX% everybody of markets the while long useful fiber the like in maintenance many be of life been belief in of in lower that and a a else, got business. pretty it's for usually run in of in experience markets down for years can lot we've we a that kind our

end to fundamentals So what trying in, us we're that the of without I should again, number. a lower lend down think, investing of you to range the give XX%

Justin Benincasa

$XX $XX probably Alaska. just somewhat Yes. was And your million, think pre Greg, to clarify, too, I million

Operator

Our is BWS with next question -- this from question Financial. Hamed Khorsand

Michael Prior

operator. something be wrong there, know must I

Operator

we Thank Yes, unmute or can Hamed else. you. you may someone to try need

Justin Benincasa

I if We'll that to get have Yes. him, to come fixed. guess, back

Operator

Yes.

have we So question from James. Prentiss Ric another with Raymond

Ric Prentiss

time, it. take air Just I'll open

Michael Prior

have dead can't airtime. We

right? You know that,

Ric Prentiss

opine about you The have high-speed interest questions wireless, Internet. reduce there do it the about lot Can follow-up your markets Is wireless Just to think have do out is, fixed had exactly. internationally all on first, a industry Exactly, hear I fixed fixed there? capacity you in me of the domestically an one Can wireless? offer of and and interest more How churn? follow-up. kind now. about you I

Michael Prior

spectrum it's of used bringing we better, we mix and populated solutions capacity and towers because every user. And absolutely fairly have are right? Yes, I think it's all varies, little a fiber like very in partly Bermuda, really. We've But places it's good like technology part we each areas of high-speed An the economics of to in and mix. if our part parts it fixed markets high using the even are a deliver in virtually and or got typically Cayman enough availability area wireless can in home. some the Cayman It's densely populated. to connections availability,

the in always with have And the of as and sort kind that U.S. we the called really working across on been well, customer we've of the experience it board. improved towns. have And U.S., technologies hills

quarters the wireless number made it of where typically come. solution. of we've fixed If areas, the through expect have in a -- bring in the And we're even So network hill fair in a the towns people loading we rural investments we'll the would to connect fiber we to going on areas to but to we're or in to tend on something. the then fiber to the hills, And wireless fixed capacity live be U.S. the a towers bring subscribers and them, businesses. we into ranch that be the amount in to have going

Ric Prentiss

some is, what Okay. And a role recently one other on topics into your of -- had you of views guys the been other in [indiscernible] what into world, satellite smartphones plays out the the direct-to-device satellite connectivity but thoughts some [indiscernible]? question has are where direct-to-device have

Michael Prior

functionality it's I an I So great to just operator. and like deliver a a it's we'd customers. mobile a tool, great think think right? that's great. are be where And the we to going It's are mean not where operator, functionality, we to our I

our it's areas. who -- It's think I for are probably of in good out good customer there our it's for areas. remote in workers our some base

usage I going going is So -- a functionality, mean it. here big is different it's in it's they're I get think want how to But question. available it, people of used it to to come. totally I think everyone terms watch

know, anything don't if Brad, you I to that to had add or...

Brad Martin

No, that evolve. a case continue see great And to that. definitely agree. for fully But we use will

Ric Prentiss

to like get and Is chipset, seems the really operator congealed chipset fair all a operators, And satellite the together. the phone is kind and the the of thought the it that ecosystem or... -- working

Michael Prior

do [ we know Apple, that. -- it's with I XCom, I have of don't were working ], some which is sat got is believe. which to in global if know I I know enough. I mean that right, did think I involved

there's And are are so who providers and other -- that. those doing

does So me questions, of it operator? it seems to a further to effort. Any multipronged be have sort

Operator

I'm questions this at showing further point. no

I'd like now for So remarks. Michael prior it closing to turn -- to back

Michael Prior

a third you. you thank Well, call. good one. us That's for joining on the Thank Okay. all quarter

Justin Benincasa

Take care, everybody.

Operator

Thank the program. This you in conference. participating today's concludes for

disconnect. may You now

ATN International (ATNI) 26 Oct 232023 Q3 Earnings call transcript