ATN International, Inc.

Good day, ladies and gentlemen, and welcome to the APN International First Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference is being recorded. and I'd like to turn the call over to Chief Financial Officer Justin Benincasa. You may begin.

Great. Thank you, operator. Good morning, everyone. Thank you for joining us on our call to review our first quarter 2019 results. With me here is Michael Prior, ATN's Chief Executive Officer. During the call, I'll cover the relevant financial information and Michael will provide an update on the business and outlook. Before I turn the call over to Michael for his comments, I'd like to point out that this call and our press release contain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results that differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, I would refer you to our earnings release on our website at atni.com or the 8-K filing provided to the SEC. And I'll turn the call over to Michael. Michael Prior All right. Thank you, Justin.

Good morning, everyone. My remarks this quarter are going to be relatively brief since it's been only two months since the year-end call. So just as usual, I'll start with an overview and then go quickly through the segments and finish. When I look at this quarter, I would look at it and say the story might best be entitled The Tale of Two Segments. One is very positive and one is not. First, the negative, our U.S. telecom segment reported historically low results with adjusted EBITDA well below levels we have seen for many years. While there is some seasonality in those numbers and the effect of an asset sale and some other items, these results are primarily due to the decline in our core wholesale wireless revenues. Second, the positive. Today, international telecom is by far the largest segment, accounting for roughly three-quarters of total revenue for the quarter, and we are pleased by the progress and future prospects of this part of the portfolio. So I said I was going to be brief, so let's move from that directly into the segment discussion beginning with International Telecom. So while in line with our expectations, it was good to see the growth of both revenues and operating margins in this segment. The reasons for this growth should be familiar. We returned to a full-scale, more normal operating environment after some five quarters of hurricane recovery work, and we are continuing to see broadband and other data service growth. following our major network investments. You can see this data growth clearly in the subscriber numbers with data subscribers ending the quarter at more than 125,000, 12% higher than a year ago. And we do think this sort of organic growth coupled with cost controls will be a recurring theme this year and into next. Lastly, as Justin will cover, so far we are seeing the free cash flow expansion for this segment that we expected and spoke to in our last earnings call. Moving to the U.S. telecom segment, this was a disappointing quarter, as I said, even after you account for the effect of the transactional and subsidy items that were expected and much discussed. I will assure you that our team is not idle in the face of this adversity, and we are still working diligently to try to reposition the main wholesale business. And while success is not guaranteed or even completely defined, our goal is to create a sustainable and more predictable stream of revenues and cash flows from those operations moving forward. and I do expect our understanding of that future will become clearer as 2019 progresses. In the meantime, as we stated in the press release, we do anticipate results improving a bit in the next quarter due to a variety of issues that disproportionately affect either the year-on-year or sequential comparisons. Beyond that, we have a number of initiatives involving different businesses and service offerings within this segment outside of wholesale wireless. But there's nothing new of note to report on that since our last call. In renewable energy, there's also little to add to the update we offered in late February. Segment revenues and adjusted EBITDA are, of course, down year on year because of the U.S. asset sale. Now that the India business is producing steady revenues and operating cash flow, We are focused mainly on opportunities to increase scale. In other developments during the quarter, ATN Ventures made a significant new investment in XCOM, a new venture focusing on developing new wireless technologies that was launched last year by members of the former leadership team at Qualcomm. We are excited about this chance to invest in and partner with a very talented group. We share their vision of rapid changes to communications technologies, which we will believe will open up the prospect of new business models in the broader sector. So to sum it up, our largest collection of businesses is producing favorable trends and expanding cash flow, but our legacy US wholesale business is still fighting headwinds, which we are working hard to combat. And we are investing not an insignificant amount of our capital and time pursuing business expansion and investment opportunities. And now I'll hand it back to you, Justin.