ATN International, Inc.

Good day, and thank you for standing by. Welcome to the ATN International Q2 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, ATN CFO Justin Benicosta. Please go ahead.

Great. Thank you, Sean, and good morning, everyone. Today we will review our second quarter 2023 results. With me here today is Michael Pryor, ATN's Chief Executive Officer, and Brad Martin, ATN's Chief Operating Officer. Michael will provide an update on our business and strategies, as well as a high-level overview of our quarterly results. I'll then cover our financials and provide additional color where necessary. As a reminder, we released our second quarter results press release last night after the market closed. Investors can find this release and the results presentation for the call on our investor relations website. Before I turn the call over to Michael, I'd like to point out that this call Our press release and the presentation contain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operating results. These statements are subject to the risks and uncertainties that could cause actual results to 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 the reconciliations comparable gap measures. And for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at ati.com or the 8K filing provided to the SEC. I'll now turn the call over to Michael for his prepared remarks.

Thank you, Justin. Good morning, everyone, and thank you for joining us. We capped the first half of 2023 with a strong second quarter, highlighted by robust subscriber growth and an accelerating conversion of subscribers to our high-speed networks. Before we discuss specific operating metrics, let me share three key takeaways from our second quarter performance. First, we continue to execute well against our three-year plan, delivering higher revenue and EBITDA on healthy subscriber growth. we have demonstrated strong momentum on the customer front with growth in all key retail subscriber categories and some big wholesale and enterprise customer wins, such as the recent long-term agreement we announced with the national carrier in the U.S. And third, with this month's renewal and expansion of our credit facilities, we continue to prudently manage our balance sheet with a focus on using future cash flow from operations to enhance liquidity and reduce debt. We're on a well-defined strategic mission to provide connectivity for all. Through our glass and steel and first-to-fiber strategies, we are focusing on regions including Alaska, the Western U.S., the rural tribal lands out there, and the Caribbean. Validating the success of those strategies, our high-speed subscriber base and international mobile subscriber base each grew by double digits in the quarter. a testimony to the quality of our value proposition, and strong sales and marketing execution. Homes passed by our high-speed data networks increased 10% sequentially at the end of the second quarter. This represents a 66% annual increase and was driven primarily by the rapid expansion of our fiber networks in Guyana and the United States. This in turn led to a 22% year-on-year increase in high-speed subscribers. In our international segment, we exited the quarter with more than 399,000 mobile subscribers, a 14% increase from the same period last year. Justin will provide more color on the operating segments in his prepared remarks, but our results underscore the fact that we're on a strong competitive footing as we move into the second half of this year and beyond. Among ATN's unique competitive advantages, is that we have made the right investments to scale our business and provide customers with an unsurpassed portfolio of services. In our island and Caribbean markets, we have repeatedly been the first to provide advanced high-speed data services, whether fixed or mobile. In the Western U.S., we undertook a difficult multi-year effort, now nearly complete, to transition from providing wholesale roaming services to providing a suite of infrastructure and network services to our large carrier customers. And to that, we are actively layering on fixed fiber and other high-speed data services to local businesses, schools, healthcare facilities, and consumers. As part of that evolution, in May, we were excited to announce a long-term agreement with Verizon Wireless, under which we will provide an array of network, infrastructure, and technical services. The initial term of the agreement is seven years and includes automatic renewals for up to two additional three-year periods. This long-term contract reinforces the value of our glass and steel strategy and the differentiated services we offer to the market. The agreement leverages our operating capabilities and network assets across more than 50,000 square miles of the Western United States to deliver superior high-speed connectivity at an attractive cost to our customer. Also, in our U.S. operations, our teams continue to excel at securing government subsidies and support as part of our focus on delivering advanced high-speed connectivity to rural and remote communities. In the second quarter, we were awarded a $10 million grant to subsidize the build of a fiber and fixed wireless network, which will pass more than 11,000 unserved and underserved locations in New Mexico. We expect more awards in coming quarters as we follow on the more than $150 million in grants awarded to us and our partners last year for fiber expansions in Alaska and the lower 48. The network builds funded by these and future grants are likely to extend over the next several years, which should in turn provide a continuing opportunity for customer and revenue growth. In the first year and a half of our three-year fiber expansion plan, We've made meaningful yet prudent capital investments to ensure the quality and durability of our network. As we approach the latter stages of this plan, we expect to dial back our capital spending while using our upgraded network footprint to continue to grow our subscriber base and recurring revenue. Another important recent achievement was the completion in July of a $300 million debt refinancing that extends and expands our senior secured credit facilities. Justin will add some details about this shortly, but in light of the current credit market environment, the agreement is a testament to the support of our bank group and the strength of our business and track record. Before I conclude, let me address potential investor inquiries in response to recent media coverage about the use of lead-covered cabling in the telecommunications industry. Last week, we issued a news release detailing our preliminary findings. We believe that our network in the U.S. contains less than 10 miles of lead-sheathed copper cables, and our network outside of the U.S. contains approximately 20 miles of lead-sheathed copper cables. To the best of our knowledge, substantially all of this conduit is buried underground and none of it is underwater. While we do not expect this to be a significant financial or operating issue for ATN, The health and safety of our employees in the communities where we operate is always a key priority for all of us at ATN, and so we'll take this matter seriously as we evaluate next steps. In summary, we begin the second half of 2023 with positive momentum driven by growing revenue, improved margins, and expanding subscriber bases. Our upward trajectory provides us with the ability to lean into our commitment to pair capital spending as our three-year plan approaches completion next year.