WOW(WOW) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - High-speed data (HSD) revenue for Q3 2024 was $107.5 million, a decrease of 2.1% year-over-year but an increase of 2.4% from Q2 2024, attributed to a small rate increase and simplified pricing [11][19] - Total revenue for Q3 2024 decreased by 8.7% to$ 158 million, with video and telephony revenue dropping by 28% and 9.5% respectively [19] - Adjusted EBITDA reached a record $77.3 million, up 9% year-over-year, with an adjusted EBITDA margin of 48.9% [11][20] Business Line Data and Key Metrics Changes - The penetration rate in greenfield fiber markets increased to 17.5%, up from 15.4% at the end of Q2 2024, driven by strong performance in the residential business [13] - The Edge-out penetration rate for the 2024 vintage increased to 45%, growing over 6 percentage points, while the 2023 vintage reached 29.7% [14] - The traditional video business saw a decline to 66,300 subscribers, a 34% decrease from the same period last year [16] Market Data and Key Metrics Changes - The company experienced a loss of 4,400 HSD subscribers during the quarter, with approximately 1,900 losses attributed to the ending of the ACP program [14] - The company added 1,100 fiber HSD subscribers in greenfield markets and 1,200 in edge-out expansion markets, partially offsetting the drop in legacy footprint [14] Company Strategy and Development Direction - The company is focused on re-accelerating its fiber greenfield strategy, aiming to pass 400,000 new homes over the next few years [9][21] - The partnership with YouTube TV is expected to enhance content offerings and capitalize on the shift to video streaming [17] - The company plans to continue restructuring away from its video platform to improve efficiency and profitability [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery from hurricane impacts, estimating a loss of 6,000 to 7,000 subscribers due to the storms [30] - Positive trends were noted in legacy markets, with initiatives like speed upgrades and simplified pricing contributing to reduced churn and increased customer loyalty [31][32] - The company anticipates continued growth in penetration rates and customer acquisition in expansion markets [33] Other Important Information - The company closed a$ 200 million super priority term loan to enhance liquidity and support its fiber expansion initiatives [9][21] - Total capital spend for Q3 was $40.5 million, reflecting a significant decrease in expansion CapEx [22] Q&A Session Summary Question: Expectations for broadband trends excluding ACP impact and storm - Management noted that the impact from ACP roll-off is complete, and they are still assessing the hurricane's impact, estimating 6,000 to 7,000 subscriber losses [28][30] Question: CapEx plans and new builds - Management confirmed an additional$ 10 million in CapEx for greenfield expansion in Q4, bringing total greenfield spend for 2024 to around $70 million [34] Question: Financial projections and modeling - Management indicated that legacy markets remain profitable and cash-generating, while greenfield markets are still in the investment phase [38] Question: Update on acquisition proposals - Management stated that there are no new updates regarding the unsolicited acquisition proposals from Digital Bridge and Crestview Partners [41]