Consolidated Communications Holdings, Inc.

Good morning. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communications first quarter earnings conference call. Please be advised that today's call 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, again, press star one. Thank you. I will now turn the call over to Jennifer Spouty, Senior Vice President of Investor Relations and Corporate Communications. Jennifer, you may begin your conference.

Good morning and welcome to Consolidated Communications' first quarter 2022 earnings call. Our earnings release, financial statements, and presentation are all posted on the investor relations section of our website at consolidated.com. Please review the safe harbor provisions on slide two of the 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 filings with the SEC. During this call, we will also refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release. On the call today are Bob Udell, President and Chief Executive Officer and Steve Childers, our Chief Financial Officer. Following their prepared remarks, we'll open the call up for questions. I'll now turn the call over to Bob Udell.

Thank you, Jennifer, and good morning, everyone. 2022 is off to a fast and productive start. Our team is energized, our build machine is executing well, and we're expanding our flagship vidium fiber product to new markets. Today, I'll update you on the progress of our build, the demand we are seeing, and comment on our cohort data now that one full year is in the books since our fiber expansion began. Consolidated's mission is to turn technology into solutions, connecting people, and enriching how they work and live. This mission is centered at the core of our fiber expansion plan as we connect more locations every day with superior fiber internet and a digital infrastructure that will enable consumers, businesses, and communities to thrive in the coming years. We have a significant opportunity with 2.7 million total passings and a plan to upgrade over 70% of these locations, or 1.6 million locations, by 2025. We're roughly 100 days into our newly launched Vidium fiber product, and the response continues to be very positive. Vidium was initially launched in northern New England. Vidium is designed to make broadband easy. It means simple plans, transparent pricing, and an exceptional customer experience from end to end. We are offering 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 the same day and on time by appointment, and we have a dedicated premium customer support channel. All of this is to create the best experience possible for our customers. Fidium has been very well received as measured by our industry-leading net promoter score numbers and the very positive customer feedback we've received so far. We're looking ahead with plans to launch a 2-gig product this June. First quarter brought our strongest period of fiber net ads yet, with 8,000 total consumer and SMB new fiber subscribers. An important inflection point was achieving positive net broadband connections in northern New England this quarter. Seventy-five percent of these net ads are new subscribers, with the remainder being DSL upgrades. Additionally, over 60% of our fiber subscribers are taking the one gig speed. We kicked off our growth plan in early 2021, quickly ramping the fiber construction engine while also embarking on a total retooling of our customer acquisition process and service experience. Our initial cohort is just reaching the 12-month mark, and penetration is tracking slightly above our target of 14%. This initial cohort reflects the very positive receptivity experienced in communities and a higher ratio of DSL upgrades pre-fidium launch. As a reminder, our cohort penetration targets for year two are 24% and year three, 33% as outlined on slide four. Terminal penetration will be closer to the 40% range over a five-year horizon where we have duopoly parity. Also in first quarter, we hit an important inflection point in northern New England, where we saw net broadband unit growth for the first time. An even more important milestone will be turning the total company net positive for broadband connections, which we expect to occur in early third quarter. This will be our next major inflection point in our transformation to a fiber-first broadband service provider and aligns with a roughly three times growth in fiber connections for 22 compared to 2021. The opportunity for FIDIUM is significant, and we are just getting started. Now, we're excited to bring FIDIUM fiber to 50 additional markets this month, which brings us to a total of 150 communities where FIDIUM will be available by the end of second quarter. We've had a great response to our community launch announcements, which have generated hundreds of pre-signups. Now, let me tell you more about our pre- and post-launch plans. We're using a targeted digital and local media strategy to announce Vidium and provide easy options to pre-sign up via our self-serve enhanced website. Our strategy is to win subscribers at the neighborhood level and provide a frictionless digital order experience. In fact, we're using the construction process to build relationships with local community leaders who are very excited about our mission to improve the economic future of their community. We are creating some great buzz with Vidium influencers and We're creating FIDIUM fans while generating great interest at local community events. You can see some of this excitement on slide six. Our new digital customer experience provides intuitive self-serve options which make it easy for customers to do business with us. These tools significantly enhance the customer experience throughout the service delivery process. For example, before we launch a new FIDIUM fiber market, prospects can enter their contact information and they will be automatically notified when Fiber service is available and ready for sale on their street. Consumers can order new service on Fidiumfiber.com, schedule their appointment, and the order is automatically provisioned when the install is complete. We're using web chatbots to address the most prominent service requests, and our new portal offers customers the ability to manage payment preferences and even link multiple accounts to a single account, all at Fidiumfiber.com. In addition, Our new Fidium Attune Wi-Fi smart home app allows customers to view active devices on their network, run speed tests, create and manage user profiles and controls on their network, manage security for every device on their network, and filter suspicious activity. Consumers can manage their home Wi-Fi for an overall optimal network experience. On slide three, you can see the pace of our bill, including our plan to upgrade 400,000 locations this year. 265,000 upgrades will occur in our northern New England states of Maine, New Hampshire, and Vermont. The remaining upgrades are in Texas, California, Illinois, Minnesota, and Pennsylvania. Our team has demonstrated the ability to accelerate the fiber build, creating a machine capable of scaling to a pace of over 100,000 locations per quarter, and we anticipate upgrading 100,000 locations in the second quarter. We are smoothing out the release of new locations for sale on a monthly basis, improving our marketing efficiencies and effectiveness. This rapid expansion is the first critical step in achieving broadband revenue growth. To ensure we keep the schedule, we've opportunistically accelerated projects in many of our markets. An example of this is the speed with which we have completed underground work in several of our largest communities. This is a result of favorable weather and the ingenuity of our internal construction crews' knowledge of the existing conduit plan. In addition, we have inventory to ensure continuity of our construction plan. To this point, in our plan, we have secured over $87 million in broadband partnerships and grant funding support, supporting over 60,000 locations. This funding supports the build-out of rural high-cost passings. We are well positioned to capitalize on government programs and public-private partnerships with a very successful track record as we continue to pursue all broadband infrastructure grant opportunities that make sense for us. On slide five, you see our FIDM expansion markets in green. This largely represents the states where we are actively upgrading 1.6 million locations by 2025. The blue states provide upside for future builds or rationalization of assets, which we continue to evaluate. Discussions are ongoing with multiple parties. By the end of 2022, 37% of our locations will be fiber to the premise with multi-gauge capable speeds. That's up from 10% when we started this plan at the beginning of 2021. We doubled our fiber passings in 2021, and we will nearly double them again in 2022. We are well positioned competitively, and 90% of our service area has one or no competitor, and the demand for high-speed broadband continues to increase with fiber and symmetrical speeds is clearly the best product to meet this rising demand. Our fiber expansion plan is our path forward for growth and also provides opportunities for commercial and carrier channels to use the same assets for multiple revenue opportunities. Our network architecture and core upgrades enable 10 gig capabilities and eventually 100 gig services to the edge, future proofing our product portfolio. Turning to our commercial and carrier channels, We are focused on growing data transport revenue, and we did just that in the first quarter. We were seeing solid demand for emerging 5G opportunities across our regions and with major carriers and hyperscalers. Within the commercial channel, we're leading with best-in-class fiber-based solutions, and we do this by leveraging three sales channels, our direct channel, inside channel, and an agent channel we refer to as Partner One. Our commercial go-to-market strategy leverages our extensive fiber network in our solutions-based sales approach, allowing us to become a trusted provider to our customers while providing a simple solution to their complex business problems. New fiber passings with our unique routes provide opportunities for us to leverage the same fiber to grow commercial revenues. We increased our lit buildings 11% in the first quarter and had 90% of our new sales activity on our network, which correlates to higher margins increased opportunity to upsell, and a greater ability to ensure the best customer experience. I will now turn the call over to Steve, who will provide more insights on our first quarter financial results.