ATNI - Earnings call transcript Q3 2024

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Operator

Good day, and thank you for standing by. Welcome to the ATN International Q3 2024 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, Michele Satrowsky, Corporate Treasurer. Please go ahead.

Michele Satrowsky

good and operator, you, morning, everyone. Thank today and Carlos joined by Officer. Brad Officer; Executive Chief ATN's Doglioli, Martin, I'm ATN's Financial Chief This the our providing reviewing morning, XXXX we'll and results third additional outlook. XXXX quarter on insights be

As on results afternoon a website. our can the Investor after quarter conference and Investors yesterday earnings closed. Relations reminder, release our market call third announced find we XXXX the slide presentation

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

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

Brad Martin

the morning, leverage Good assets manage earnings remain value everyone, cash increase conference improvements the deliver on our prudently, margin We and thank strategy joining us you Michele. sustainable network term. to for quarter our call. you, Thank and focused our aiming to executing XXXX our long for over upgraded fiscal to third and business customers and flow by shareholders

underperformance progress our Looking the at U.S. our QX and tale segments, is performance in in X a International segment of with operations.

consumer by few These and was sales, bottom free slower bright international the affected our top performance prepaid not cash impact delivery, from operations and mobility from more of included including sales effective by several sales Alaska. We enterprise quarter, management, anticipated in strong key of are there a the ACP projected. would non-planned of specifically levels the factors. spots cost revenue government While margin lower pipelines offset key and programs, improvement at in driven line and flow U.S. underperformance these consumer in these the the and execution ECF transpired expected pace have in markets, with conclusion had but third

As a expectations. result, outlook year full updating financial are we our

strategic highlights align on are the that, improvement flow goodwill market with multiples, share generation. on market in upgraded of higher impairment quarter. related a Starting from value a our with current and dynamics segment. leveraging take charge non-cash while We $XX third actions services. With customer reported US cost we each conversion optimizing our to quarter previously offerings to to cost at levels, Telecom, within let's network to in our actions strategic operational based the compression revenue efficiency value drive structure margin our These taking include and advancing look underperformance assets, focusing and initiatives, mentioned cash during the and maintain million our

spending our available with the to capital company-funded the our BEAD government augment funding, capital enhanced is as existing underlying to program, assets, to levels. structures and our value and the maximize assessing markets, on markets wireless mobility and the believe are the services. best segment, growth way carrier the value while We of business, fiber-fed to for consumer we focus US of consumer certain there our as de-emphasizing We Telecom return of significant improve investments normalized opportunity fixed expand more and such cost recently support

to $XXX Our deliver the fiber-based for will million. in start the part is phase value due reimbursable addressable in construction These enhance assets the grant of future wins, totaling to QX. more in expenditures This longevity than projects increased business. previously our announced year-to-date, and further capital of the significantly, our markets

a performance. trusted ability network to and work our we our are recently improve to grow and position our our stabilize fiber-based with leadership customers, and revenues Telecom more is US confident assets partner do as in existing carrier to sales in there While strengthened profitability, to leverage our segment executive our

segment. Turning International now to our

continue While for as achieved revenue ARPU mobility. by strength revenue adjusted and remained flat, customers in of headwinds we sales saw consumer up progress we to network, in base by we impacting the believe progress reflected declines growth international of in and double-digit compared year. markets revenue to and margin growth offset well plan This business high-speed subscribers primarily as fixed services, more with data This XX.X% business was make them customers experienced year-over-year. high-speed our X.X% growth onto we conversion which customers. Operationally, will post-paid In pre-paid consumer quarter-over-quarter international the competitive transitioning is due resilient. EBITDA. in quality X% our in subscribers We with mobility last prepaid Guyana, to low subscriber in our mobility, continued make of higher with combined

QX launch efficiencies our unified Caribbean strategic our markets. these in largest brand in common of in in our XG XX% revenue launched to evolution from now step international in our market. international of of essential Guyana to quality drive A X across achieved a in and we X were upgrades networks. XG-capable subscriber brand the have rolled have new mobility strategy our our an We These in Communications new we came important markets. shifts milestone our out total improvements base. the And QX, seen One in major and was was the

We fixed flow. already in expect the go-to-market #X and the ATN positions and while or to enable continuing market centralized common dominant technology in improve further their and #X International architecture approach to mobile through cash strengthen team will profitability

the enhanced I Carlos, and We on localized focused capture changed. that Before our all remain turning the the managing to network to margins flows. not reiterate high-value revenue while operations on carefully cash opportunities, capitalizing to and capabilities our have want improve to business priorities call expand

resource through cycle, government the As reducing are network of internal and capital investment near programs. our although to Steel both Glass and First-to-Fiber continue & targeted we we end fund expenditures, grant X-year we expansions

sheet to gradually of long-term goal our Additionally, reducing to a a with remain leverage. committed we disciplined balance manage approach

our headwinds. adapt near-term are our we acting While remain we adjusting focused XXXX, the while nimbly executing to strategy on for expectations long-term to

for to sustainable committed for ATN the our long-term We over this are could partners. And you, of well company shareholders. not positioning and call Carlos. hand value continued team achieve hard-working trust and our as and customers We dedicated with to creation as without the the growth I'll the that,

Carlos Doglioli

Thank for Good thanks everyone, you, Brad. and us morning, joining today.

expanding with assets. driving on on focus our cost the improving business value, optimizing management, emphasis Our remains and positive through flow returns cash high-quality managing on by margins an

we there cash notably our highlights quarter, most operations in improved faced headwinds, some the markets, margins from in segment. in domestic our and Although year-over-year were free International top line generation primarily stronger

million Telecom compares market related $X.X construction This about in debt multiples. in million million income quarter million was $X.X million, operating loss we impacted of $X.X revenues. Operating related current mentioned difference in in segment The the a $X.XX to the third loss of in The aforementioned the which and our fees step-down Telecom was for per ago programs, mostly the reflects in in $XXX.X quarter, expenses with $X.XX review financial US Alaska was Affordable loss XXXX. quarter year during X% factors from year's the an prior charge segment. $X.X the income dynamics reorganization restructuring of interest cost in revenue reflects increase mostly of market or goodwill third of primarily share. our impairment period, was versus reduction the third Adjusted previously compared million includes of EBITDA operating in announced the Emergency Total driven in share. and refinancing primarily compression XXXX. QX well Let's Brad Care or down QX to operating down the margins detail. quarter loss more and management transaction as also as as took The the our $XX.X QX Connectivity and impacting $XX.X the year-over-year in million the million revenues results a as the net call. Net company with efforts by as per decline and by million spoke conclusion was same a result expense. of period the $XX.X the US U.S. Fund well revenue in was of noncash X% $XX.X

launch with government to segment and Domestic segment, million, was hurricane-related well International the quarter in with increase was construction EBITDA quarter XX.X%. XX.X% the by $XX.X and we of of we Looking conclusion revenue $XX.X direct flat of and mobility the third year, year, revenues now expect related to revenues an compared higher to performance, as The competitive as were growth well Guyana in last results prior business growth. Adjusted of support Adjusted segment. third restructuring a solid from with beginning offset in at as year-over-year XX% as revenues third were of QX continued reflects due the costs. common quarter for in our reduction which to compared previous of essentially in down with headwinds million revenues. were quarter the programs primarily the the EBITDA ECF grew gains favorably International benefit in rebranding to the down pressures year, Domestic the segment, impact ACP $XX.X our last our by mobility investments the due efforts, impacted year-over-year, as compared million, revenue This $XX.X revenue-related primarily million brand consumer segment's $XX.X onetime made also million the softness fixed costs. In

to on total net of of sheet the Moving quarter ended balance $XXX X.XXx with the a debt debt highlights. outstanding cash ratio flow We on million. and

X transaction-related XXXX, cash the by fees conditions refinancing the year The through up cycles. mentioned to was was attention extend provided driven working first $XX.X cash facility. This and operating our of efforts are collection through improve strong availability to with our the allowed for our million position August net Alaska activities in of us by associated to primarily from months period. our The increase at market earlier Our XXXX. the capital the $XX.X maturity prior million I

prior year the in from component compares government It expenditures an the of important as capital as to months $XX.X $XX.X million year. million, capital you important Turning is of CapEx enhancement can we totaled our see during net that, out in with million, This $XXX.X reimbursable to the reimbursable million of in first the net support $XX.X infrastructure numbers, now X capital in U.S. expenditures. of of to expenditures. rural continue point the see the

$XXX returned expected shareholders for million guidance to XXXX. outlook to Adjusted in of year million for expectations million the for to now let's QX, operating near-term performance. $XXX $XXX of XXXX previous million in in capital million. range dividends. With the our updating million, the our are $XXX to we year our remainder range are expected now $XXX $XXX range previous to $XXX Today, full the to of through of our range $X.X year is for with full million our with move the current of million. that, Revenues to million we reflect for compared compared During EBITDA full $XXX

We now EBITDA expectations, X.Xx. And the to million the capital of to with with of to revised reimbursed the continue adjusted to net net million, expect debt range of X.Xx a in $XXX expenditures $XXX year amounts. we expect exit ratio

monitor we leverage and in remain focused as dynamics to over down In bring and ratio margin net in our we solid U.S., positive see continue on the competitive We driving experienced past debt with term. In positioned Xx closer we from We flow X business. to to objective international the navigate the cash believe business continue conclusion, well the improvement recover the quarters. headwinds. to is the medium to momentum the

over again are to We time business the are your you today, to strategic appropriate to our in and progress for the look U.S. evolving in our months. taking solidify Brad. and market I'll call confident hand forward back the market we the the you coming actions environment. Thank adapt now updating on the we execution to

Brad Martin

Carlos. Thanks,

long that confident employees, value will ATN deliver to strategy our our local are customers, communities to enable for partners and term. shareholders, We the

flow for upgraded expanded our open markets us in our and up profitable we'd dedication cash value customers, to operator, for growth, achieve that, to provide our to Our and footprint, like to expand essential empower creation connectivity and and skilled questions. our mission it team shareholders. With increase

Operator

[Operator comes question Instructions] from Prentiss Rick Our line the of with first Raymond James.

Ric Prentiss

US Telecom the tough a on quarter side. Obviously,

kind to You we're cuts, of charge that Should Or mentioned coming? think of ECF on of to forced time what going the restructuring the that kind given kind the margins does it programs? a is frame like revenues rightsize -- we side. costs the addressing really replaced and so a ACP this and see haven't there's address take

Carlos Doglioli

question. take for the Rick, this is I'll one. Carlos. Thanks this

this bit reflecting it about talked in and reiterate we a across As of the some segments of been already that little kind different into the quarter, efforts are have we we numbers. QX, the pursuing

charges, that the U.S. segment are and some related there. some reorganization of saw are the restructuring You to efforts embedded

you the we of flowing that numbers International did in And some saw well. the benefits as as them through well,

the In changes little a terms expect take that naturally benefits structural of and and of some we we those to XXXX see more of more more pursuing, are those beyond. time, into

we're of pursuing. So process the that's kind

Ric Prentiss

And proposing of buying ballpark-wise, a wireless X/X to that merger. Spectrum -- the to a de-emphasis of was Okay. be seen kind that in from Verizon think spectrum see mobility. at buy sale There somewhere a Cellular million And then little think asset USM. should of Maybe about I talk the an continue bit significant T-Mobile your we had U.S. a north just down monetize? we How We've of megahertz and is POPs. we spectrum guys you might of propose of certainly asset. something position? chunk of its think to asset. fixed I announcement to about spectrum spectrum that Is an XXX low-band

Brad Martin

within piece Rick, been of market our business legacy spectrum operator. a yes, So being our certainly a so mobile U.S. has key

opportunities at a talked advantage how quarter, for looking can take always a last We of deal deal assets. divestiture. are spectrum we and We small non-strategic about

we in at look that that something certain optimize and how certainly the retail So still from. always we're something particular certainly, lines. is we how that looking of highest service But always that base. using spectrum can are at we extract something exit the We will it's are mobility, obviously our looking do something be value at as is that speak, we which we asset process for

Ric Prentiss

of kind how ballpark how you to it? way supporting of there kind way might some Is be noncore, have size or spectrum on a there of? much goalpost Is to not much

Brad Martin

Rick. directly, an That's not No, evolving dynamic.

we something have not here. that's So

Ric Prentiss

think of business. this Carlos, other that how and as or go revenues far 'XX? you rest to down projects construction we what's should mentioned construction about low-margin And look But year-over-year. left It's we Okay. the were a fairly the FirstNet year into as as

Carlos Doglioli

dynamics there. we choices, XXXX. think coming approximately Rick, publicly equipment I point, see million at impacting remaining of of are known with given of cetera, the et the $X But some have this in some most timing, revenues we that that the of

Ric Prentiss

more on U.S. the side. front on international one And Okay. the --

that or leadership new you're You mentioned a change? bring that of What's them kind person to table sales change. top looking does What for to the persons the for mission the sales leadership?

Brad Martin

Yes.

some mentioned delivery I had remarks, we with prepared my both So Rick, conversion. in I mean, pipeline on have and execution challenges

So we around positions multiple and and enterprise are have really sales. filled looking new for we carrier --

pipeline So of disciplined in market. enterprise that's a mature management process, area driving disciplined an driving very

and bringing are capability our to new we So in deliver. enhance to resourcing overall capacity help

Ric Prentiss

for one me. last And

and I see kind the Can part you what hurricane we help beneficial think of of costs be but versus you XQ is us some XQ rebranding the some international because mentioned some that side? you kind improvements -- there XQ could size on front items might in into this on international XQ versus of coming had it, costs.

Carlos Doglioli

over I that see there would it some pursued the quarter, numbers, of we during the we segment say, in of by we don't items are guidance related QX, on million those our segment way about the Rick, and certainly efforts quarter-specific that in there's you guidance. by the but is the remarks. of $X to of from benefits included specifically quarter give But think terms been and we some that expenses the were mentioned

Operator

the Our Sidoti. line Greg Burns next from of question comes with

Gregory Burns

demand you this your just maybe of more maybe months in you pricing offering a Because to ago? which the weren't whatnot? you, getting X much how better market or where maybe on to on is execution or competitive expecting shift versus would I'm understand trying thought maybe guess, how maybe where competitors of kind characterize part XX was U.S., relative the to just -- environment are it the I or In dynamics,

Brad Martin

Yes.

I distinguish dynamics are, there's to in different consumer areas, -- happening between markets. again, X So think and enterprise, the very those really, there key

majority on wholesale, that and the have we've lot see deals, -- continuing not maybe of been that deals the demand, do a delayed enterprise the obviously of delayed services on care -- the on lost we've to or side has been had strong not -- deals. the is on for necessarily grow. demand we certainly lost delays -- is broadband deals. so the But do had that on We the misses we some and something had So lot necessarily more have see wholesale a

moving is business So forward. the that's something that for encouraging

been I'll are is to That couple where there lot and we On to had de-emphasizing impact largest some have our we -- R&R. of side, of are nature legacy fixed dynamics. Greg, profitability broadband service the due of there that remote due and shutdown. just to we the of lot a -- Part a is ACP that Southwest, sites. dynamics, a -- of the wireless in the speak is the the and larger are Part consumer One, the of certain specifically areas. process shutting -- of down on

carrier a carriers. is dynamic we is participate new rationalize we has unique to been managed changed. major sell that network they see operations. From services progress a from it services, those to you and The overbuild. A we for access fixed us get rationalize that market, that because dynamic our in set product competitive a carriers, has wireless where a actually to that us So competitive as is for focus the have through

we through So and of our lines that flows tower carrier backhaul, enterprise lease provide service.

we where MNO the are think to is XXX very gigabit have are area north of This So to next-gen trying wireless solutions. with competitive service we megabit fixed where fixed what those wireless megabit style technology. offerings. We focus that's consider XXX to an we

So the inferior talk we because against of refocusing when brands, technology very where with it's our quality about those difficult sense. efforts, compete superior if we it's makes have technology to that

Gregory Burns

Got what just -- subscribers And of are declining. then just I it. question. kind understand some total data of next dynamic But to I broadband see growing, guess but are high-speed leads yes. want maybe you said Yes, I the the between -- this my to subscribers

So that dynamic network to this is optimization? of due

Brad Martin

we Yes, only fixed. fixed it. of rationalization, combination not -- exactly it's That's even a network wireless but have

down has as overbuilt of markets. We have legacy in copper built -- shutting our network have been we with some that fiber

Operator

question Khorsand with line Instructions] [Operator BWS the of next Financial. from Hamed comes Our

Hamed Khorsand

here. Just some follow-up

I about think of ACP all year, programs. you've been ECF and loss talking this the

So if why you of impact been weren't in you've and talking a ready year, softness now could just that understand you me sudden help all is, losses about for subscriber that consumer. the all

Brad Martin

yes, X programs. maybe Hamed, so between distinguish the So

our So ECF went spoke that markets. this deals was We some year. the to about on fill a away one earlier to of that program in pipeline, failure that pipeline backfill

that the we've backfill dynamics has that been towards the all So been -- to of one pipeline working ability is year.

between distinguish our losing that ACP of we did roughly base line their transition subscriber subscriber not -- to ACP, maintenance is XX% We projecting ACP base. of in subscriber predict of our a keeping largest came dynamic about with actually lost generally, from the Southwest expectations. with that's about about through ACP. XX%. market, A -- were we in -- which So have subscribers, consumer which that

a for required an where the them, work we What customers. sell ability retain X-month little amount There renewing had every were period new. reaching on that we to did had plan than So to did we out, not and of impact out to customer the was we planned. actually better was a those

as markets. foresee So Southwest something in did one that we not our that was as, of impactful

the ECF, year. were So ultimately the of last really was ACP announced programs. knew distinction big ECF. the after start year. and we late between ACP they about that's But

filling So of that working that planning we still that And for. was is that pipeline, revenue something significant towards. were both something a EBITDA is dynamic and we're

Hamed Khorsand

and market do is And with to there? you like just Okay. enterprise competition feel customers too saturated mature specifically the to then more win Alaska,

Brad Martin

market. -- We that assets great dynamics like. the great dynamics don't. really we we in No, relationships market that in We've market. got got that market are We've

And that as that has the see challenge. impact that has year. forecasted been a see in We challenge the through that's to the some the as don't biggest delays we challenge challenges, the date delivery and market. So big dynamic been performance been execution on a

Hamed Khorsand

is Okay. And Guyana. last on my question

approach on You postpaid are mobile on to the a of remember higher focus focusing there. still I talking it more Is you about re-strategizing just or subscribers? ARPU your kind

Brad Martin

Yes.

customer focus market the in primary services So higher focus is the and that base data. upgrade continuing to is the to

So with year. about are their plan-based along where are voice. data These that revenue. of customers we last component in a plan seen getting And we've that's data growth significant the talk

and importantly, we seeing consumption of data. seeing we're quality, So the are the

Guyana going that's very consumption Guyana, that like are market I ARPU a We're the that new And dynamic a is as lose the we the the continuing that for that, there. think really we the data good we're What great dynamic. trend That And we've -- with we're get to that ubiquitous we're that consumption demand market. are a I of very think broadly, limit that's is will -- ultimately, 'XX trend is voice access customers dynamic happy but data of a believe that will important data the market And we start well-positioned For is fighting. a where think seeing quality impact very do that's really the network to up. seeing of ultimately, us. in in results. to delivered that into something for competitor low we

Operator

remarks. further I'm to showing this closing now to like for Martin at back Brad turn would over call I the questions no time.

Brad Martin

the ahead. you in Have look speaking Thank you, many good time. of a today. months Thank joining Thank day. for your to operator. again all you for us with We forward you

Operator

conclude today's does Thank for in the participation your you conference. This program.

disconnect. now may You

ATN International (ATNI) 30 Oct 242024 Q3 Earnings call transcript