Anterix Inc.

Good afternoon ladies and gentlemen and welcome to the Antarex first quarter fiscal year 2022 investor update. At this time all participants have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to send the floor over to your host Natasha Vaccarelli, Director of Investor Relations and Corporate Communications at Antarex. Ma'am the floor is yours.

Good afternoon everyone and welcome to the Antarex first quarter Fiscal Year 2022 Investor Call. Joining me today are Rob Schwartz, our President and CEO, Ryan Gerbrandt, our COO, Tim Gray, our CFO, and Chris Gutman-McCabe, our Chief Regulatory and Communications Officer. Before we begin, please note that during today's presentation, we may make forward-looking statements, either in our prepared remarks or in the associated question and answer session. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. Risk factors that may impact our performance are identified in our most recent SEC filings. Following our prepared remarks, we will have an operator-led question and answer session. In addition, at the conclusion of today's call, A replay and transcript of our discussion will be posted to our investor relations website. With that, I'll turn the call over to Antarex's president and CEO, Rob Schwartz.

Thanks, Natasha. Good afternoon, everyone, and thanks for joining our Q1 investor call. Just recently in June, we had our investor day, where we shared our refined vision of the future of Antarex and highlighted key improvements to our business model and investment thesis. The response to that event, and specifically to our fine vision of the Enterix opportunity, has been quite positive, not only from our customers in the utility sector, but also from the investment community. Since most of you heard the Investor Day presentation, I'll reiterate a few key points, and then I'll provide a brief update on the continuing momentum since then, further supporting this developing industry movement. Our prospective customer pipeline now includes over 50 utilities with a total potential prepaid contract value of about $3 billion. And with the increasing demand for prepayments that we're hearing from prospective customers, we currently believe that the majority of our contracts will be prepaid in full over the first three to five years of the contract terms. This evolution brings significant cash flow earlier than previously anticipated in our forecasts. and allows us the potential opportunity to begin to return value to shareholders within the next two calendar years. In our current fiscal year, ending March 31st, 2022, based on our current sales pipeline, we continue to forecast signing contracts with proceeds over $200 million. Looking ahead through fiscal year N24, we intend to sign approximately $1.8 billion of contracted proceeds. totaling about 50% of our nationwide spectrum value. By fiscal year N24, we would expect to have collected approximately $300 to $500 million in cash proceeds, with the remaining more than $1 billion contracted due to be collected soon thereafter. And beyond that point, we expect to continue to grow, with 50% of our spectrum value still on our balance sheet, available to monetize, as well as the residual value of our lease renewals, plus our ability to explore and develop potential new revenue opportunities with partners. Foundational to all this momentum is a modern communications platform driven by the utility's need for connectivity to provide situational awareness and allow for the command and control of millions of distributed assets across a growing utility footprint. Our 900 megahertz low band spectrum specifically addresses these needs and is propelling the demand side for Enterix's spectrum offering reflected in our growing list of pilots and industry activity. Let's now spend a few minutes discussing the significant additional signs of momentum that we've seen just since Investor Day. First, an additional three companies have applied for experimental licenses on our 900 megahertz spectrum. These entities include a utility, Tampa Electric, as well as technology leaders Ericsson and Burns and McDonald. It's worth noting that utilities are no longer pursuing pilots to confirm private LTE as a technology. Pilots are more often being used to demonstrate use cases and to build support internally for investment business cases. As Ryan's detailed in the past, not every utility will seek an experimental license before they move forward with private LTE, but they are a good indication of continuing momentum throughout the industry. Let's spend a few moments discussing key areas of focus for each of these three new experimental licenses. Tampa Electric is a Florida-based investor-owned utility who, per the FCC experimental license application, is exploring use cases in support of electric and gas utility operations, including AMI, SCADA, and other uses. Tampa Electric joins more than 10 other utilities who have leveraged 900 megahertz spectrum to better understand the unique resiliency, reliability, and security features of a dedicated private LTE network. It's also worth noting that TAMP Electric is one of the 11 utilities that also purchased CBRS licenses at auction, and like several other CBRS licensees, is working with us to explore the complementary nature of these bands, which is helping us develop our integrated solution. Ericsson, a global leader in broadband communications, and Burns & McDonnell, a leading engineering, construction, and consulting firm to utilities, are each independently showcasing the value of 900 MHz private LTE in solving multiple use cases. Ericsson joins both Nokia and Motorola as infrastructure thought leaders working hand-in-hand with Enterix to help drive 900 MHz education, development, and ultimately adoption. We have other major efforts underway to increase awareness and attractiveness of our spectrum to utilities, such as the Enterix Active Ecosystem Program. As a reminder, we announced the program in May with 37 world-class technology industry leaders coming together to provide a wide range of solutions for 900 megahertz private LTE networks. The number has now grown to over 50 technology leaders, including Cisco, GE, Hitachi, Qualcomm, and many more. These ecosystem members have a vested interest in supporting private LTE at 900 megahertz and are actively engaged with our team to collaborate on devices, services, and solutions that can support and address the current and future needs of utilities and other critical infrastructure entities. Since the launch of this ecosystem program, we've heard from numerous utilities about the significant value they see in this active ecosystem effort. As I previously described, We also expect the relationships in this ecosystem program to develop into commercial opportunities for Enterix. I want to highlight one example that we just announced. This morning we issued a press release outlining a new relationship with Federated Wireless. For those of you who don't know Federated, they were the leading proponent at the FCC in bringing the CBRS spectrum to market in its novel shared model and are a key provider of the CBRS SaaS platform service that's required for access to that mid-band spectrum. As discussed in today's press release, we're bringing to market a combined and complimentary offering of dedicated use of our 900 megahertz broadband spectrum paired with Federated Wireless's shared spectrum SaaS services for use on the CBRS band. This is a logical relationship as we are already working with many utilities on the hybrid approach of combining low band 900 megahertz with an overlay of mid band CBRS to add capacity and coverage in incremental areas as needed. As we identified at our investor day, the remaining 70% to 85% of the utility spend on private LTE network deployments and operations beyond the cost of our 900 megahertz spectrum creates an opportunity for Enterix to identify low capital intensive ways to build incremental value for our shareholders. This relationship with Federated is a good initial example of the kind of opportunities we referenced. We look forward to sharing more about these options for incremental developments throughout this coming year. We also are seeing continued significant positive momentum from policymakers. Yesterday, the Senate voted to pass the Infrastructure Investment and Jobs Act. Language in the Act embraces the intersection between grid modernization and private broadband communications, as well as the connection between utility private LTE deployments and the support for rural broadband. The bill provides billions of dollars earmarked to support these efforts. The legislation now moves to the House for their consideration. As we've detailed in the past, we do not need legislation to deliver on our business plan. However, the education of policymakers and the industry alone has already aided in heightening the awareness of the importance of our efforts. Washington's focus on decarbonization, distributed energy, and infrastructure has shined a light on our goal of helping to modernize America's electric grid. That being said, with this bill's passage, we would expect that this would be a further catalyst to securing utilities interest in Enterix's offering. And another important milestone for Enterix, in the last few weeks, the FCC granted our first broadband licenses for several counties of our initial customer, Ameren. Those grants are the culmination of a lot of hard work by our team, the utility sector, and the team at the FCC. They also represent the formalization of our effort to deliver broadband for mission-critical needs across the United States. As we shared at our investor day, Enterix intends to become the de facto private wireless broadband solution provider to the utility and critical infrastructure sectors. With our breakthrough achievements, continued significant momentum and tailwinds, we feel we are well aligned to achieve this mission and look forward to sharing more about our continued progress with you all soon. Thank you very much. With that, I'll turn it over to the operator to open the call for questions.