Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- WideOpenWest Inc (WOW, Financial) achieved record adjusted EBITDA of $77.3 million, marking a 9% increase year over year with a margin of 48.9%.
- The company successfully closed a $200 million super priority term loan, enhancing liquidity and supporting the reacceleration of its Greenfield fiber expansion strategy.
- Penetration rates in Greenfield fiber markets increased to 17.5%, with residential business penetration rates exceeding 20%.
- WOW's simplified pricing strategy and complementary speed upgrades have contributed to increased ARPU and reduced churn.
- The company has begun adding customers in its newest Greenfield fiber market, Hernando County, Florida, indicating successful market expansion.
Negative Points
- High-speed data revenue decreased by 2.1% year over year, reflecting a decline in HSD subscribers.
- Total revenue for the third quarter decreased by 8.7% due to significant drops in video and telephony revenue.
- WOW lost a total of 4,400 HSD subscribers during the quarter, with 1,900 losses attributed to the ending of the ACP program.
- The traditional video business continues to decline, with a 34% decrease in subscribers from the same period last year.
- The company faces uncertainties related to the impact of hurricanes and the discontinuation of the ACP program, affecting subscriber numbers.
Q & A Highlights
Q: Can you provide insights on the underlying broadband trends for Q4, excluding the ACP impact and storm, and discuss the competitive environment? Also, how will the additional $10 million CapEx for Greenfield expansion affect year-end results?
A: Teresa Elder, CEO: The ACP impact resulted in a loss of 1,900 customers this quarter, totaling 6,900 for the year. We don't expect further ACP impacts in Q4. The hurricane's impact is estimated at 6,000 to 7,000 customers, mainly in Augusta. Despite these challenges, we've seen positive trends in legacy markets due to speed upgrades and simplified pricing. Our Edge-out and Greenfield markets are showing strong penetration. John Rego, CFO: We slowed CapEx in Q3 but will spend an additional $10 million on Greenfield in Q4, bringing the total to around $70 million for 2024. Total CapEx will be $205-$210 million, with similar spending expected next year.
Q: How should we model the business based on the financial projections provided during the financing transaction? What is the adjusted EBITDA trajectory for legacy and Greenfield markets?
A: John Rego, CFO: The projections shared during the financing transaction can serve as a baseline. Legacy markets remain profitable and generate significant cash flow. Greenfield markets are still in the investment phase and are currently cash negative, but they are building shareholder value. We'll provide more clarity on 2025 in the next call.
Q: Can you confirm if DigitalBridge and Crestview are still involved in the go-private pursuit, or if any new parties have approached you?
A: Teresa Elder, CEO: There are no changes from our previous updates regarding the acquisition proposal.
Q: With the recent financing, how do you plan to manage the pace of new builds and CapEx over the next year?
A: John Rego, CFO: The pace of expansion spending in 2024 will likely continue for the next couple of years. The recent capital raise was aimed at reaccelerating our fiber expansion, and we are back to building fiber homes.
Q: What are the expected impacts of the hurricanes and ACP program discontinuation on subscriber numbers for the full year?
A: John Rego, CFO: We expect a loss of 6,000 to 7,000 subscribers in Q4 due to hurricanes and have already accounted for 6,900 subscribers lost due to the ACP program discontinuation earlier this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
