Cogent Communications Holdings, Inc.

Good morning and welcome to the Cogent Communications Holdings first quarter 2020 earnings conference call. As a reminder, this conference call is being recorded. It will be available for replay at www.cogentco.com. I would now like to turn the call over to Mr. Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings. Please go ahead.

Good morning and thank you very much. Welcome to our first quarter 2020 earnings conference call. I'm Dave Schaeffer, Cochran's Chief Executive Officer, and with me on this morning's call is John Michel Slagmuylder, our Acting Chief Financial Officer. We are pleased with our results for the quarter and continue to be optimistic in the underlying strength of our business. and our outlook for 2020 and beyond, even with the impact and uncertainty of the COVID-19 pandemic. Our quarterly gross margin reached a company record high of 60.5%. It increased sequentially by 20 basis points and increased year over year by 70 basis points. Our EBITDA margin for the quarter increased 30 basis points from the first quarter of 2019 to 35.8%. On a constant currency basis, we achieved sequential revenue growth of 0.6% and year-over-year quarterly revenue growth of 5.6%. A reduction in universal service fee excise taxes for this quarter reduced our revenue by approximately $600,000. On a constant currency basis and adjusting for the impact and a reduction of USF, our quarterly revenue growth would have been 1% on a sequential basis. Our year-over-year traffic growth was 36% for the quarter, and we achieved Sequential traffic growth for the first quarter over the fourth quarter of 2019 of 12%. During the quarter, we returned $30.6 million to our shareholders through our regular quarterly dividend. We did not purchase any common stock during the quarter. At quarter end, we had $34.9 million available in our stock buyback program which our board has authorized to continue through December 2020. Our gross leverage ratio decreased in the quarter to 4.78 from 4.86 from the last quarter, and our net leverage ratio increased slightly to 2.92 from 2.86. Our cash held at Cogent Holdings at quarter end was $80. This cash is unrestricted and available for dividends and or buybacks. Cash held at our operating company level was $294,600,000 and our total combined cash was $375,100,000 at quarter end. We remain confident in the growth potential and cash generating capabilities of our business. As a result, as we indicated in our press release, we have announced yet another sequential increase in our quarterly dividend, increasing that dividend two cents per share sequentially from $0.66 per share per quarter in the fourth quarter to $0.68 Thank you for joining us today. and the accompanying responses of governments around the world. Beginning in mid-March, Cochran transitioned its entire workforce worldwide to a remote workforce, which continues through today. This transition, while difficult, was accomplished with little disruption, and I'd like to thank and compliment the entire Cochran workforce for a seamless transition. In particular, our IT group stepped up and helped equip our remote workers so they can continue to work effectively. I'd also like to personally thank our field engineers who are frontline supporters and are out installing customers, maintaining and upgrading our network as we continue to serve customers. During the first quarter of 2020, the impact of COVID-19 pandemic was fairly limited. In the last two weeks of March, we saw a positive impact in our net centric revenue growth, but a slight downtick in our ability to install new corporate customers. We also saw during these two weeks a material increase in traffic on our network. However, the ultimate impact of the pandemic on Cogent is unknown at this time as a significant amount of uncertainty and volatility remains. While Cogent has moved to a remote work status, we have no assurance that over the long run this will be sufficient to protect our workforce and key employees. Moreover, as a result of operations could adversely be impacted, as the future of the pandemic and its trajectory and associated governmental restrictions may continue. We may see a downturn in new customer orders, find it difficult to collect from customers who are experiencing financial distress, and encounter difficulties accessing buildings and locations to install new customers and to perform repairs for existing customers or have difficulty in procuring and or shipping equipment to our field operations. Lastly, the global impact of the pandemic may have prolonged economic effects that could impact our business as well as other businesses. These risks are described in more detail in our 10Q filed for the quarter and this will be filed shortly after today's call and these will supplement the risks that are outlined in our year-end 10-K for December 31st, 2019. Throughout this discussion, we'll highlight several operational statistics. I will review in greater detail certain operational highlights and trends and Jean-Michel will provide some additional details on our financial performance Following our remarks, we'll open the floor for questions and answers. Now I'd like to ask Jean-Michel to read our safe harbor language.

Thank you, Dave, and good morning, everyone. This earnings conference call includes forward-looking statements. These forward-looking statements are based upon our current intent, belief, and expectations. This forward-looking statement and all the statements that may be made on this call that are not historical facts are subject to a number of risks and uncertainties and actual results may differ materially. Please refer to our SEC findings for more information on the factors that could cause actual results to differ. COGEN undertakes no obligation to update or revise our forward-looking statements. If we use non-GAAP financial measures during this call, You will find these reconciled, the gap measurement in our earnings release, which is posted on our website at www.cogentco.com. Now, I'd like to turn the call back over to Dave.