Consolidated Communications Holdings, Inc.

Good morning. My name is Chantelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communication 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 a few 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, please press star one again. Thank you. I will now turn the call over to Jennifer Bowdy, Senior Vice President of Investor Relations and Corporate Communications. Jennifer, you may begin your conference.

Thank you. Good morning and welcome to Consolidated Communications' fourth quarter 2021 earnings call. Our earnings release, financial statements, and presentation are posted on the Investor Relations section of our website, at consolidated.com. Please review the Safe Harbor provisions on slide two of our presentation. Today's discussion includes forward-looking statements about expected future events and financial results that involve risks and uncertainties that may cause actual results to differ materially from those expressed today. A discussion of factors that may affect future results is contained in Consolidated's filings with the SEC including our 10K report, which we intend to file on Friday, tomorrow. In addition, during this call, we will refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release tables. On the call today are Bob Udell, President and Chief Executive Officer, and Steve Childers, our Chief Financial Officer. Following the prepared remarks, we will open the call up for questions. I will now turn the call over to Bob Udall.

Thank you, Jennifer, and good morning everyone. On today's call, I will provide my thoughts on our fourth quarter results and update on several operational initiatives and recap our long term strategic priorities. Steve will then provide details on our financial results, the recent Kansas asset sale agreement, and he'll provide an outlook for 2022. Before I get into the fourth quarter, let me remind you of how far we've come these past 18 months, and I'm incredibly excited with the progress we are making. A year and a half ago, we initiated a new growth plan for Consolidated by entering into a strategic partnership that enabled the most ambitious fiber expansion in our 127-year history. As part of this growth plan, we secured a total capital infusion of $425 million. This investment served as a catalyst for us to complete a global refinancing of our external debt and allowed us to strengthen our balance sheet by extending maturities and increasing liquidity. This partnership structure also enables us to immediately invest and execute as a fiber-first broadband company. The fourth quarter was a critical inflection point for Consolidated as we completed year one of our five-year fiber expansion plan. Our first year priority was to create the network build engine and scale while also redefining the customer experience. And I'm extremely pleased that we delivered just that. First, we exceeded our target by upgrading 330,000 passings with fiber services and gig plus capable speeds. And we began to scale our customer acquisition engine, creating the foundation for significant ads in 2022. Second, We launched our new FIDIUM fiber brand with a fresh and easy-to-use web interface, and we're building the customer acquisition engine to align with the construction pace. We also implemented Net Promoter Score, or NPS, measurements. Third, we closed on the second stage of the Searchlight investment, which provided additional capital to support our growth plan. Each of these accomplishments provides the runway for accelerated momentum in the current year and beyond. We are on track with our build plan We've learned a great deal over the past year, and we are building the path for a return to growth. This team is energized, motivated, and we're very excited. Now, speaking of the excitement, have you seen our new Fidium Fiber brand? In November, we launched Fidium Fiber, the brand representing our new fiber-based broadband offering and an entirely transformed customer experience. Fidium is designed to make broadband easy, as outlined on slide five of our investor presentation. It means simple plans, transparent pricing, and a stellar experience from end to end. We are offering superior gig symmetrical speeds, premium whole home mesh Wi-Fi capabilities, no data caps, no contracts, and all at an extremely competitive price point. We have the ability to install fiber services within three days of order, and we have a dedicated premium customer support channel. All of this is to create the best customer experience, which we measure by NPS, a widely used customer satisfaction and loyalty benchmark for performance and productivity. Fidium has been very well received as measured by our industry-leading NPS numbers and the very positive customer feedback we received so far. In mid-November, we did launch the Fidium brand in select markets in northern New England, and it is coming soon to other regions this year. Our new online ordering experience has grown our digital channel and is now producing nearly half of our new Fidium orders. As you can imagine, the excitement at Consolidate is incredibly high as we position Fidium to grow and accelerate in 2022. As a result, fourth quarter brought our strongest quarter of FiberNet ads with 4,500 new Fiber subscribers and 15,500 FiberNet additions in the first year of our build plan. Expanding the FIDIUM experience and our customer acquisition engine to the rest of our markets will certainly have a positive impact on our fiber penetrations this year. Our growth machine is beginning to scale and is accelerating. Now, as we look back on our first plan year, we've created a well-oiled machine which builds fiber to scale. We knew we needed to stay ahead of the supply chain, but found that access to advanced CP was more difficult to secure than we anticipated. We now have ample CPE to support our customer acquisition plan. You know, you only have one chance to launch a new brand, and we were committed to ensuring all aspects of the fiber product and customer experience are optimal. We intentionally launched 5Pfidium later in the year than planned for this reason, to ensure the best customer experience, which we view as a key differentiator. We've improved our processes and are aligning our build plan with our go-to-market strategy. We continue to provide transparency on our fiber cohort penetration targets, which are outlined on slide six. We expect to achieve 14% cohort penetration within 12 months of being ready for sale, 24% within 24 months, and 33% after 36 months in the life of an individual cohort. As we approach the one year anniversary of our Q1 2021 cohorts, we are exceeding the 14% year one target penetration. As we have discussed in the past, we believe our long-term penetration capability is closer to the 40% range, which we can achieve, where we can achieve duopoly parity over a five-year horizon. The opportunity for Fidium is significant, and we're just getting started. Now, looking at 2022, we are laser-focused on ramping our customer acquisition initiatives as we extend the Fidium brand to additional markets and ramp up the sales teams in areas where we are expanding our fiber reach. We have significantly enhanced our digital sales engine, adding operational efficiencies to our customer installation process. Our strategy is to win subscribers at the neighborhood level and provide a frictionless digital order experience. We continue to connect with our customers at local and community pop-up events. Our new digital customer experience provides intuitive, self-serve options, which make it easy for customers to do business with us. These tools also significantly enhance the customer experience throughout the service delivery process. And let me tell you, this is a powerful combination of using a targeted neighborhood sales channel coupled with a best-in-class digital customer experience, which is key to the value proposition of our new fiber services. Our Fidium online experience launched in mid-November, and in just over a month, we drove significant order activity to the web. We expect this trend to continue as more customers utilize self-service tools, lowering our overall cost and improving efficiency and customer communications. Our fiber bill plan is outlined on slide four, and it shows the progression as we upgrade 1.6 million locations, or 70% of our total passings, by 2025. We're making fantastic progress. In the fourth quarter, we brought fiber gig plus capable services to more than 111,500 locations. For the full year, we upgraded 330,700 fiber passings and doubled our fiber coverage to 22% of our addressable markets by the end of 2021. We have built a machine that is fully capable of upgrading more than 100,000 locations per quarter, bringing economic, employment, and quality of life benefits to the residents and businesses in the communities we serve. In 2022, our target is even bigger. We plan to upgrade 400,000 locations, which when complete, will bring 1 million total passings or nearly 40% of our addressable market being fiber by the end of the year 2022. We are well positioned to capitalize on government programs and public-private partnerships within our footprint and are actively pursuing all broadband infrastructure grant opportunities that make sense for us. Just this week, the NTIA awarded $18.3 million to the Connect Maine Authority, supporting our build of 22,000 fiber locations within our footprint. We are the primary build partner in this grant and are excited to bring FIDIUM to even more locations in rural Maine. Connect Maine and other agencies recognize that our incumbent advantages and build track record make us a quality partner, and we expect to continue to do so where it makes sense for us. This fiber expansion is our path forward for growth, and represents the foundation of our transformation. It also provides opportunities for commercial and carrier channels to use the same assets for multiple revenue opportunities, which I'll discuss next. Before I do, let me remind you of our commercial and carrier strategy. We are focused on leveraging our core fiber network to offer the most reliable network solutions and unique fiber routes. Our network architecture and core upgrades enable 10 gig and eventually 100 gig services to the edge future proofing our product portfolio. Steve will provide more details in his remarks on trends and results for these channels and discuss the impact of the carrier contract renewals. But within our carrier channel, we have a long track record of delivering industry leading high bandwidth solutions to national wireless providers and hyperscalers. We deliver innovative bandwidth solutions to carriers who choose consolidated over and over again based on the earned trust and reputation we have built over decades of meeting their needs. We see emerging 5G network opportunities across our regions and with all major carriers as well as some hyperscalers. Our carrier team is proactively managing contract renewals, which is resulting in some near-term price compression, but in exchange for incremental long-term contract value. Within the commercial channel, we're leading with fiber-based solutions coupled with our cloud services in order to secure and retain long-term relationships with businesses in our markets. We do this by leveraging three sales channels, direct, sales channel, inside sales, and an agent channel we call Partner One. We continue to see great sales activity for our ProConnect Unified Communications voice solution. This demand is coming from a variety of industries, including retail, banking, and government. We see good opportunity to grow our ProConnect cloud voice within the SMB channel, where businesses don't want to maintain an on-premise system and realize the many benefits of a commercial-grade posted voice solution. SD-WAN growth continues as customers need better routing platforms and built-in redundancy and network intelligence. Our best-in-class solution through VLO Cloud is driving this growth and the more diversified workforce brought on by pandemic is fueling internet bandwidth growth as well and a transition to services like SD-WAN. Our commercial go-to-market strategy leverages our extensive fiber network and our solutions-based sales approach, allowing us to become a trusted advisor to our customers while providing simple solutions to complex problems. New fiber passings provide opportunities to light more buildings and pursue near-net fiber expansion. Our security and cloud Wi-Fi are leading cloud solutions, which provide significant benefits to customers, bringing up IT resources and reducing their capital outlay. 90% of our new sales activity is on our network, which correlates to higher margins, increased opportunity to upsell, and a greater ability to ensure the best customer experience. We're maintaining flexibility in our CapEx plan for success-based commercial and carrier builds, which also extend our... I'll now turn the call over to Steve, who will provide more insights on our fourth quarter and full year 21 financials. Steve?