Consolidated Communications Holdings, Inc.

Good morning. My name is Casey and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communications Fourth Quarter Earnings Conference Call. Please be advised that today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now turn the call over to Jennifer Stoudy, Senior Vice President of Investor Relations and Corporate Communications. Jennifer, you may begin your conference.

Thank you and good morning. I would like to welcome everyone to Consolidated Communications' fourth quarter 2020 earnings call. On the call today are Bob Udell, President and Chief Executive Officer, and Steve Childers, our Chief Financial Officer. Bob's comments today will highlight our strategic initiatives and our operational results, as well as our accelerated growth plans. Steve will provide some details on our fourth quarter and full year financial performance and outlook for 2021. Following the prepared remarks today, we will open the call up for questions. Before we proceed, I will remind you our earnings release, financial statements, and earnings presentation are all posted on the investor relations section of our website, which can be found at consolidated.com. Please review the Safe Harbor provisions on slide two of the presentation. Today's discussion includes statements about expected future events and financial results that are forward-looking and subject to certain risks and uncertainties. A discussion of factors that may affect future results is contained in consolidated filings with the SEC, and our 10-K will be filed tomorrow. Today's discussion will also include certain non-GAAP financial measures. Our earnings release includes reconciliation of these measures to the nearest GAAP equivalent. I'll now turn the call over to Bob Udell.

Thanks, Jennifer, and good morning, everyone. I'd like to welcome all of you to Consolidated Communications' fourth quarter 2020 earnings call. And I'm very excited to talk to you about how 2020 was a pivotal year for Consolidated Communications. The pandemic brought unforeseen challenges, yet our business performed very well. This past year highlighted the critical importance of the services and support we provide to consumer, commercial, and carrier customers, as well as our success in adapting to meet and exceed our customer expectations. We were part of the Keep America Connected pledge and rapidly installed, upgraded, and maintained services to our customers. Our fiber network successfully handled the increased traffic levels and performed very well. Our teams ensure customers stay connected with stable and upgraded broadband connections wherever they are and make safety a priority at all times in their work. I'm proud of what we accomplished in our business and for our customers while at the same time growing strategic revenue and increasing our adjusted EBITDA year over year. 2020 also brought a strategic partnership for us with Searchlight Capital Partners, who committed to make a $425 million total investment, resulting in an immediate capital infusion of $350 million, which we announced in September of last year. In conjunction with this investment, we refinanced our capital structure, which provides us the capital and financial flexibility to accelerate our fiber network expansion. We have over $600 million of liquidity, and extended the debt maturities until 2027. With our strong balance sheet and strategic partner in Searchlight, we will upgrade 1.6 million fiber passings over the next five years. We're building on an excellent platform for the future. We are well on our way to becoming a fiber-first broadband company. Our goal is to provide an excellent customer experience, grow our consumer and commercial broadband penetration rates, and increase data ARPUs and ultimately return the company to revenue growth. We couldn't be more excited about what lies ahead as we have a fully funded growth plan, a strong balance sheet, and increased liquidity. Our fourth quarter results were very positive and demonstrate the stability of our business, the strong execution and improving revenue trends, and increased adjusted EBITDA. Coming into 2020, we committed to produce stable earnings and grow free cash flow. And that's just what we did in the fourth quarter and for the full year 2020, despite the challenges COVID-19 presented. The pandemic has certainly changed how we do business, but it has not had a material impact on our results. Revenue trends are improving, and we were able to grow adjusted EBITDA for the recent quarter and the year. Turning to commercial and carrier, we grew data and transport 3.2% in the fourth quarter and 1.9% for the year. We have a very consistent track record of growing this strategic revenue stream, as you'll see on slide five. Our carrier channel continues to support 5G backhaul upgrades at tower sites and core network upgrades to support fiber to the tower initiatives for our national carrier partners. As we build out carrier grade capacity, we increased on-net buildings 11% year over year. Our sales team is doing an excellent job of maintaining strong relationships and collaborating closely with carriers to identify upgrade opportunities. Our focus is on targeting on-net sales, which make up roughly 90% of new sales activity. This correlates to higher margins, increased upsell opportunities, and a greater ability to ensure the best customer experience, ultimately contributing to higher customer retention. Within our commercial channel, unified communications demand remains strong. Our ProConnect VoIP revenue grew 10% in the quarter and 12% for the year. We're pleased to have recently received the UC Excellence Award, UC for Unified Communications, recognizing our ProConnect solution for the outstanding value it offers businesses. We also expanded our Microsoft productivity suite to all markets and announced a partnership with Ciena and its adaptive IP solution, which offers essential IP capabilities to support new applications using cloud-like scale and intelligent automation. The result? simplifies administration, troubleshooting, and reduces costs for our customers. Our CCI Ignite sales approach remains key to our success. A recent win with the educational network in the east includes more than 300 circuits across 80 locations. Our dense fiber network enabled us to win this deal, upgrade bandwidth to one gig, and add additional locations. Now turning to the consumer channel, we grew broadband revenue 2.8% in the fourth quarter, as shown on slide seven of our presentation. This represents the seventh consecutive quarter of year-over-year broadband revenue growth. In 2020, we completed five fiber overbuilds across four communities, passing just 2,000 locations with Federal CARES Act support. In first quarter, we will complete fiber overbills across five additional communities, adding more than 8,000 fiber passings. We continue to see significant demand for rural broadband networks and partnership opportunities. A dozen towns representing 20,000 additional passings have accepted our bill proposals, with work starting later this year, and additional towns are currently evaluating bids. Because of our dense fiber network proximity, we are well positioned to partner with rural communities to build fiber where it typically would be difficult to justify financially. Customers are clearly seeing the benefits of these fiber-based services. In the new areas we just released in fourth quarter, we are seeing penetration rates consistent with other recent fiber builds at this same stage. In a build we completed last year in Chesterfield, New Hampshire, where we have limited competition, we were at 60% penetration after one full year. In rural New York, where our fiber bill passes over 10,000 locations with significant cable overlap, we realized 32% penetration in two years. These take rates are consistent with our plan. About one-third of sales are new connections on the network with the majority of all subscriptions at one gig symmetrical. These builds are an optimal test of our process, product, and pricing for our larger fiber build plans. And we're off to a fast start. Crews have built nearly 400 miles of fiber since early January. We will upgrade more than 300,000 passings in total for 2021, enabling fiber multi-gig speeds. The majority of these upgrades will be in northern New England. And in addition, we will also target areas in California, Texas, Illinois, and Minnesota. This is the first step to extending fiber to more than 70% of our total passings. And to be clear, our plan is about more than just building fiber. Our go-to-market strategy has been meticulously planned out. We will offer multi-gig symmetrical broadband speeds, simple plans, highly competitive pricing, and a stellar customer experience, all to create a truly differentiated service offering. We are placing a concentrated focus on delivering the best in-home experience possible using the latest Wi-Fi 6 technology and advanced troubleshooting tools. We will update you regularly on the new fiber product offerings and go-to-market plans throughout the year. I'm very pleased with how resilient our team was in 2020 and how well they executed across our three customer channels. An incredible amount of work has been done to position us for the future, and we are executing our fiber expansion plans. I will now turn the call over to Steve, who will provide more details on our fourth quarter and full year 2020 financial results. Steve?