Consolidated Communications Holdings, Inc.

Ladies and gentlemen, good morning. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Consolidated Communications Second Quarter Earnings Conference Call. Please be advised that today's conference is being recorded and 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 star one once again. Thank you. And I will now turn the call over to Jennifer Spoudy, Senior Vice President of Investor Relations and Corporate Communications. Jennifer, you may begin your conference.

Good morning, and thank you for joining the Consolidated Communications second quarter 2022 earnings call. We announced a material event yesterday afternoon with the sale of our wireless investments. therefore we're moving our earnings call up to speak to you all sooner 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 and 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 filing with the SEC. In addition, during this call, we'll refer to certain non-GAAP financial measures, which are defined and reconciled in our earnings presentation and press release. With me today on the call are Bob Udell, our 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'd now like to turn the call over to Bob Udell.

Thank you, Jennifer, and good morning, everyone. I'm excited to share second quarter results, which include a few very important milestones associated with our company transformation to a fiber broadband company. In the second quarter, we delivered a record number of consumer fiber ads and turned net positive for broadband connections, offsetting DSL declines. This is an important milestone. Our build machine continues to execute well and produce a record 142,000 additional fiber passings constructed in the recent quarter. In the first six months of the year, we've built fiber to 226,000 locations We are on track to achieve roughly 1 million total fiber locations this year as we upgrade over 400,000 passings by the end of 2022. Each of these operating milestones reflect key inflection points and position us for a return to revenue growth with our fiber build execution. Additionally, we took an important step subsequent to the end of the quarter and announced the sale of our wireless partnership investments for 490 million, the proceeds of which will be invested in our fiber expansion and growth plan. This transaction enables Consolidated to further advance its transition to a fiber-first broadband company and is consistent with our strategic priorities focused on creating long-term value by simplifying our business and fully executing on our fiber expansion plan. Steve will provide some more details on this sale in his remarks. In the recent quarter, we added 9,600 Fiberfidium subscribers, a three-times increase from a year ago and 25% increase from our record first quarter ads. We also achieved total consumer positive broadband ads for the year. Most importantly, this fiber customer gain outpaced DSL losses for the first time in seven years. The vast majority, 80% of our net ads are new fiber subscribers with over 65% of those subscribers choosing our one gig service. For the full year 2022, we are on track to add three times the fiber net ads from 2021. Vidium is now available in 150 communities and we launched 2GB symmetrical speeds at the end of June. While it is still early, we are pleased with the customer interest and reaction of our 2GB promotions. And importantly, Vidium 2GB further solidifies our position as the technology leader in the markets we serve. We continue to see significant growth in data consumption. Our fiber customers consume two to three times more data per month than DSL customers, and upstream bandwidth usage and demand is continuing to increase. An open vault study noted upstream bandwidth has tripled over the past three-year period. Fiber is clearly the superior product and critical to satisfying future market demand. And our fiber product is designed to make broadband easy. This means simple plans, transparent pricing, and a digital customer experience, which makes it easy for customers to do business with us. Our symmetrical speed, premium whole home mesh Wi-Fi, no data caps, and no contract service is game-changing for the markets we serve. We offer convenient installation appointments and have a dedicated premium customer support channel. All of this is to create the best experience possible for our customers. Customer satisfaction closely, and Fidium has been very well received, as measured by our industry-leading net promoter score of over 50. This high score reflects all the elements we have been working so hard on to ensure Fidium delivers the best customer experience possible. Fidium fiber broadband is really a game changer. Turning to cohort penetrations, our cumulative 2021 new fiber build cohorts continues to exceed our penetration target of 14% at the 12-month mark. In addition, our pre-built base cohort penetration has increased 80 basis points to 21% year-over-year. This increase in our pre-built fiber base reflects the positive receptivity we've experienced in our communities. As a reminder, our cohort penetration target for year two is 24% and year three is 33%. Terminal penetration will be closer to the 40% range over a five-year horizon where we have a duopoly parity. I thought it might be useful to give you some additional context on our fiber markets. We'll break it out into three tiers. 65% have a population of 10,000 or less. Roughly 25% have a population between 10,000 and 50,000. And our largest markets are over 50,000 and make up 10%. As a reminder, ninety percent of our markets have just one cable competitor and no other fiber provider and by introducing fiber we are providing an alternative superior technology that didn't exist previously in these communities that said we're not seeing anything notably different from last quarter as far as the competitive environment there's no new entrance or significant responses where we have upgraded to the fideon fiber product, and we are building the best fiber network and have the best product with the best customer experience. We continue to generate very strong pre-signup activity where we are launching Vidium. We're using a targeted digital and local media strategy to introduce Vidium and provide easy options to pre-signup via our self-service and enhanced website. June was our best month for net ads since we started the build, and July looks to be well exceeding it. Turning to our fiber bill plan, which is outlined on slide five, we are on track to upgrade over 400,000 locations this year. By the end of 2022, we'll have roughly 1 million fiber passings and we'll have 2 million fiber locations when we complete our planned vidium fiber upgrades. Our fiber expansion plan represents significant transformation and growth opportunities for our consumer, commercial, and carrier channels that provides us the opportunity to leverage these assets for multiple revenue streams. Our network architecture and core upgrades enable 10 gig capabilities and will enable 100 gig services to the edge in the future, really future-proofing our product portfolio. We see additional opportunity in 2023 for up to $100 million in broadband partnership and grant funding projects across just a few of our states. We're actively pursuing all opportunities that align with our build plan and help offset rural high-cost passings, allowing a return consistent with our model. As demonstrated by our very successful track record in securing and executing public-private partnerships, we are well-positioned to capitalize on incremental government programs. There continues to be strong demand for faster speeds and fiber services, which we believe is a superior product. Our plan is clear, and we are executing well on it. We have several meaningful fiber deployment advantages, including our incumbent position. We know these markets very well and have a fiber rich carrier class network that we can cost effectively extend. We have existing conduit capacity for varied facilities and pull access where we have aerial fiber. Approximately 80% of our fiber is aerial in Northern New England and in close proximity to our existing fiber backbone facilities. And we have very experienced teams and access to contract workforce which allows us to flex, ensuring we complete our builds on time. Turning to our commercial and carrier channels, we continue our long track record of growing data transport revenue across both channels in the second quarter. 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. One success I'd like to highlight in the second quarter was with a Champaign, Illinois-based educational network. We designed and delivered a 10-gig switch Ethernet network across 23 locations. This is a great example of solving a customer's bandwidth pain point and delivering a diverse, scalable network solution. Fair revenue benefited from timing related to contract negotiations and a one-time fiber IRU sale booked in the second quarter. As we have previously discussed, The fiber to the tower business is under some rate-re-rate pressure, but as a result of these negotiations, we are seeing an opportunity to bid and win on new towers. New fiber passings within our unique routes provides opportunities for us to leverage the same fiber to grow commercial revenues. We increased our lit buildings 10% in the second quarter and had 90% of our new sales activity on our network, which correlates to higher margins, increased opportunity to upsell, and a greater flexibility to ensure the best customer experience. Now, let me address something on everyone's mind, and that's economic conditions. We are beginning to see some slower decision-making on the part of enterprise customers. However, our sales funnel remains solid. It's just from quote to signing, it's taking a little longer. In addition, fuel and energy costs are increasing, and we're taking steps to mitigate these increases. We are fortunate that we built up our inventory and worked ahead on our fiber builds where possible, allowing us to accelerate some of this year's build while keeping our unit costs down and overall build costs lower than they otherwise might be. I will now turn the call over to Steve, who will provide more insight on our second quarter financial results.