Anterix Inc.

Good afternoon, ladies and gentlemen, and welcome to the Antarex first quarter fiscal year 2023 earnings call. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Natasha Veccarelli. Ma'am, the floor is yours.

Good afternoon, everyone, and welcome to the Antarex first quarter fiscal year 2023 investor call. I'm Natasha Vaccarelli, Vice President in Best Relations and Corporate Communications at Antarex. Joining me on the call 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 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 filing. Our SEC filings can be found on our website or on the SEC's website. Investors are questioned not to place undue reliance on forward-looking statements, and we disclaim any obligation to update or revise these forward-looking statements after the date of this presentation. 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.

Good afternoon, everyone, and thank you for joining the call. With our last call being just several weeks ago, I'm going to focus today's discussion on providing an update on our contract progress, customer pipeline, and industry movement. And then we'll open it up for questions. As we have said, our Antarex mission is to be the de facto private broadband solution for utilities. We fully recognize that continuing to close individual deals is a near-term imperative. Our goal is to capture the sector. While accomplishing this goal will take time, I remain confident that we are uniquely built to succeed in this effort. Let me share three reasons for my confidence. First, we have the right team, with our Nextel lineage experienced in successfully pioneering a disruptive and transformative effort. Nextel was the first nationwide wireless platform and drove a range of industries, public safety, construction, utilities, and more, to adopt a single, unified wireless solution. And at the time, it was also difficult to predict how long it would take to execute on that mission. With our focus at Enterix on the utility sector, we have added considerable utility knowledge and experience to our seasoned wireless team to support and advance our efforts. We believe this combination of wireless and utility experience is unmatched. and best positions us to continue to win customers and execute on our business plan. Second, our solid financial position is a core element of our strategy, designed to ensure that we have the time it can take to define a new market, move an industry, and secure our de facto mission. We own a unique and valuable nationwide spectrum asset. We have a strong and debt-free balance sheet, operate a lean organization, and are a prudent steward of capital. At the end of the quarter, we had $86 million in cash and roughly $50 million in remaining contracted proceeds due to be paid in the next few years. Our capital-efficient model allows the vast majority of contracted proceeds to result in free cash flow. And we have multi-decade customer lease contracts with renewals with little to no churn, providing significant value well into the future. And third, we have the right unique product at the right unique time. Enterix is purposely positioned to help solve growing critical and complex challenges for utilities, including grid modernization, renewable energy integration, a new environmental reality, including wildfires and massive storms, expanding cyber and physical security risks, and a growing focus on energy equity and more. These realities provide strong tailwinds of support for the necessity of private broadband networks. Accordingly, attention is expanding across the sector, reflected in the continuous growth and maturation of all three phases of our pipeline, as well as forward movement for a number of our larger, more complex deals. The public industry focus on private LTE and Enterix is measurable. There is over 50% of our nationwide spectrum value represented in the combined participation from the C-level leaders of our new Utility Strategic Advisory Board, the utilities that have pursued experimental licenses at 900 megahertz, and the membership of the independent Utility Broadband Alliance that we helped found. And it should not come as a surprise that these are the utilities that we are aggressively working with to help them finalize their 900 megahertz private LTE plans. Add to that our 80-plus member Antarex Active Ecosystem Program, and our three early adopters, and you can see the tremendous movement across the sector towards 900 megahertz broadband for utilities. So with that, let's dive into some details of our pipeline. We've heard from investors the request to provide more color on specific pending opportunities in addition to the pipeline stages and LOI status that we previously shared. In response, within the limitation of our NDAs, I'm going to take you through four deals presently in phase three of our pipeline, as well as provide a few additional updates. To start, we've agreed to commercial contract terms, including price, term, deployment schedule, and more, with a large multi-state, multi-operating company utility. I'm pleased to say that we are presently working through the utility's internal approval process with C-level support, which we believe will lead to a final sign-off on good contract terms. We are confident that we are on a solid path towards our next contract with what would be our largest customer to date. Through this experience, we continue to learn that, like all pioneers, it's difficult to predict the exact timing of when these deals close, as paths can and often do evolve as they proceed. As Morgan likes to remind me that Aristotle once said, patience is bitter, but its fruit is sweet. In our second example involving a large multi-state utility, the customer's private LT network is part of a much larger grid hardening effort, which involves their transmission system, the significant integration of renewable energy, and the overall enhancement of resilience. This broad and complex scope of this project prolongs the duration of their executive review, which is well underway. This relationship began as a 900 megahertz pilot where the entity explored multiple use cases and has now evolved to include enterics engaged up to their president while simultaneously helping their third party expert to develop a strong private LT network business case. Our third example involves a multi-state IOU with several operating companies, resulting in an increased complexity but in turn a significantly larger scope of opportunity. Comparable historical commitments like this would have been achieved over many sequential years one operating company at a time. For this utility, however, Private LT is proving a different model, demonstrating a set of strategic benefits best realized across the entire unified service territory. They've developed a comprehensive plan, which has now been validated by multiple third parties, and demonstrating, among other benefits, significant OPEX savings throughout the program life. This prospective customer has strong C-level support across their holdings and operating companies. The final opportunity that I'll highlight today is developing at the operating company level of a large multi-state holding company. This utility has successfully developed its strategic, technical, and capital plans to support their private LTE network build out. We've worked with this utility to align the goals of their deployment with state regulatory priorities and cybersecurity initiatives. They too have C-level involvement given the strategic importance of the solution. These are four great examples. pulled from our current pipeline of over 60 prospective customers, demonstrating the growing demand for 900 MHz private LTE, our role in these strategic decisions, and the value we can bring to the sector. Looking more broadly, I'm pleased to share that there are multiple utility RFPs under development, where our 900 MHz spectrum is being specified. And additionally worth noting, based on inbound requests, we are now seeing interest from a number of entities that were previously opposed to private LTE, which to us is another strong sign of progress towards our de facto mission. And while we continue to stay laser focused on the utility sector and our mission to become the de facto provider of private broadband solutions for our nation's utilities, we are receiving interest from a range of organizations in other sectors. This inbound interest is reflective of the private broadband network demand, we are seeing across critical infrastructure verticals, including pipelines, gas companies, freight rail operators, and government installations. We believe the majority of these entities and the use cases they are pursuing could fit well within a utility private broadband deployment supported by our nationwide network of networks platform strategy. So when you cut through it all, We are pioneering the transformation of the utility sector's communication capabilities, as well as the monetization of our nationwide spectrum asset. We are creating an even more valuable, unique platform that supports the critical need to revolutionize our nation's electric grid, a process that we believe will be well worth the time invested. And while there is considerable and growing attention in the marketplace regarding private broadband networks, we aren't just talking about it. we are uniquely converting large multi-state customers to commit to build the largest of private broadband networks in our nation. Additionally, the activity we have seen in Congress and with the administration, from bipartisan infrastructure legislation to the recent Inflation Reduction Act, supports our efforts and confirms the importance of the issues we're helping utilities address. With the growing tailwinds of demand for private networks across sectors, the requirements to address our nation's decarbonization and grid modernization goals, and with an increasing focus on mitigating the risks to our grid caused by natural and manmade disasters, we remain confident that we can achieve our mission to become the de facto provider of private broadband solutions to utility and critical infrastructure sectors, leveraging our 900 megahertz spectrum asset. With that, I'll turn it over to the operator for questions.