Altice USA, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Altice USA Q4 2020 results presentation. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Nick Brown. Thank you. Please go ahead, sir.

Hello, everyone, and thank you for joining. In a moment, I'll hand you over to LTCUSA's CEO, Dexter Goey, and our CFO, Mike Rohr, who will take you through the presentation, and then we'll move to Q&A. As today's presentation may contain forward-looking statements, please read the disclaimer on page two. Dexter, please go ahead.

Hello, everyone. Before we begin, I once again want to thank and take the opportunity to thank the LTCUSA team, extremely proud of its ongoing commitment displayed by our employees in navigating the pandemic, together delivering superb results for 2020, including very strong financials and record customer growth. Starting with slide three, we grew reported revenue 1.4% for the full year, or 2.6% adjusted for the impact of RSN and storm credits. In the fourth quarter, we grew reported revenue by 2.5%, and 3.6% adjusted for RSN and storm credits. We grew adjusted EBITDA 3.5% on a reported basis for the full year, or 4.8% excluding mobile and storm costs. Q4 saw an acceleration in EBITDA growth to 6.1% year over year on a reported basis, or 6.6% ex-mobile and storms. The pandemic highlighted the importance of connectivity for both homes and businesses, And we set a record for both customer and broadband net additions. And we continue to see very strong demand for higher broadband speeds. We added 81,000 residential customers, more than five times the 15,000 customers we gained in 2019, and 142,000 broadband customers, about double that of 2019. We also delivered our highest ever free cash flow of $1.9 billion for the full year. In 2020, we also took advantage of market volatility and demonstrated our commitment to delivering attractive shareholder returns, delivering a record $4.8 billion in share of purchases, including a $2.3 billion tender offer we completed in December. We successfully completed a sale of a minority stake in our light bath business to Morgan Stanley Infrastructure Partners in Q4 and acquired Service Electric of New Jersey earlier in the year. We also continue to proactively manage and strengthen our balance sheet, refinancing $4.4 billion in debt, achieving our lowest ever average cost of debt at 4.7%. All of this positions us incredibly well for 2021. Michael, providing more color on the outlook, I just want to say that while we face the ongoing uncertainty around the resolution of the pandemic, we remain very confident in our ability to continue to deliver revenue and EBITDA growth as we have done in 2020. We can expect CapEx, in the $1.3 to $1.4 billion range as we re-accelerate our fiber build and expect leverage to fall below 5.3% at CST Holdings, even with a target of $1.5 billion in share purchases for the year. Turning to slide four, we just want to take a moment to highlight some of the corporate commitments we've made as a company to support our customers, our employees, and the broader community, as well as opportunities for us on a go-forward basis. We provided free student broadband to customers during the pandemic, participated in the FCC Keep Americans Connected pledge, and provided many connectivity solutions for the broader community. We created a $10 million community relief program and have partnered with numerous philanthropic organizations like DonorsChoose and the Boys and Girls in Club of America. We also implemented numerous measures to keep our employees and customers safe. In addition to the pandemic, 2020 was also a year of significant social unrest and environmental disruption. On both fronts, we are extremely committed to doing our part. We remain committed to diversity and inclusion, including our recent recognition with a perfect 100 score for the third year in a row on the Human Rights Campaign's Corporate Equality Index, where we were also named the best place to work for LGBTQ equality. Separately, we continue to focus on environmental stewardship and have numerous renewable energy projects in our pipeline that will reduce emissions and will also drive down cost savings. Turning to slide five, you can see our underlying revenue growth remains strong in this environment, again demonstrating the strength of our business. Total revenue grew 2.5% year-over-year in the fourth quarter and 1.4% in the full year. We booked $19 million in RSN revenue credits this quarter and $97 million in the full year due to fewer games being delivered during the MLB shortened season. As a reminder, these RSN credits do not impact reported EBITDA or cash flow since they are passed through. In addition to the RSN credits, we issued storm credits for affected customers totaling about $10 million this quarter and $27 million for the full year. Excluding both RSN and storm credits, total revenue growth would have been 3.6% this quarter and 2.6% for the full year, a very strong result given the pandemic. Residential revenue grew 2.2% in the quarter and 1.6% for the full year, excluding both RSN and storm credits. Business services grew 0.6% in the quarter and 2.3% in the full year, excluding RSN and storm credits. We're extremely pleased with the recovery in news and advertising, where revenue grew 29.7% year-over-year in the quarter and 9.1% for the full year. Even without political, news and advertising revenues only declined by about 3% in 2020 and grew 3.5% in Q4, a very strong result given the broader backdrop. Turning to slide six, we want to highlight the record-breaking customer and broadband growth we had in 2020. The best way to describe our momentum is through a full year 2020 lens. On a reported basis, we gained 81,000 residential customers organically, more than five times 2019 net additions, 415,000 including service electric, compared to only 15,000 customer net additions in 2019. Remember, in the fall, we were impacted by a combination of three hurricanes, Delta, Flora, and Isaias. We had about 11,000 disconnects from the storms and still have about 9,000 customers in our customer accounts that we're hoping to retain whose bills are currently past due 90 days. On an adjusted basis, excluding non-current customers affected by storms that we normally would have disconnected, we still gained 72,000 customers organically, 83,000 customers excluding the impact of storm-related disconnects, 417,000 inclusive of service electric. In residential broadband, we gained a record 142,000 organic net additions in 2020, close to double what we achieved in 2019. Adjusted to exclude the 9,000 noncurrent storm-affected customers, we still added a record 133,000 broadband customers organically, or 144,000 excluding the impact of storm disconnects. Including service electric, we added a total of 172,000 residential broadband customers on a reported basis. overall this extraordinary customer growth sets us up very well for 2021. turning to slide seven in the fourth quarter we saw reported net customer loss of 15 000 residential customers which includes customers associated with the fcc pledge and new jersey executive order as you may recall we ended q3 with about 22 000 pledge and new jersey customers who were late under payments by more than 90 days all of those customers have been brought current in the fourth quarter through a combination of balance forgiveness, payment plans, or cash payments. So far, we are seeing positive trends, payment trends in that cohort in early 2021. Recall that the pledge, the FCC pledge, ended in June. A significantly amended New Jersey order has been extended through March 2021, but we don't anticipate there to be any additional risk to our customer base from that extension. Adjusted for the retention of these subscribers, as well as excluding non-current subscribers affected by the storms, Q4 residential customer losses were minus 2,000 on an adjusted basis. Further adjusted for storm-related disconnects in Q4, residential customers would have shown a net gain of 3,000, better than the minus 5,000 customer loss in Q4 2019. Residential broadband net additions were a positive 9,000 in Q4 2020, adjusted for the retention of past two subscribers formerly covered by the FCC pledge and the New Jersey executive order. And excluding the non-current customers affected by the storms, broadband net additions would have been 14,000, further adjusted to exclude the 5,000 additional storm disconnects, which would have been double the levels of Q4 2019 when we reported 7,000 broadband net additions. For 2021, we think the appropriate benchmark for broadband customer growth is 2019, and expect to be at least in line or better with this level as we continue to return to more normalized levels. Once we get past any residual noise from the storms in New Jersey order in the first half, we expect more of a tailwind to customer growth in the second half of the year, especially as we see more of a benefit from our accelerated pace of edged-out build-outs. Again, we remain very well positioned for 2021 with a much bigger base of customers than we had anticipated acquiring a year ago, a rapidly expanding and upgraded network and with broadband penetration at only 48%. Turning to slide eight, we continue to see our network performing very well even with heavier usage during the pandemic. Our broadband speed upgrades remain elevated up 70% year over year. These higher upgrade volumes continue to reflect enhanced connectivity needs from the switch to work from home and remote learning. Average monthly data usage per customer was up 40% year-over-year, averaging approximately 468 gigabits per customer per month in Q4. And our broadband-only customers used nearly 600 gigabits of data per month. 41% of our gross additions took one gig broadband speeds in areas where it was available, up from 29% in third quarter. And we remain very optimistic about the one gig opportunity. Following the commercial launch of our Fiverr double and triple play offerings in third quarter, I'm very pleased to say our Fiverr selling rates are already at 58%, up from 44% in the third quarter, ending the year with just under 26,000 customers and representing an enormous growth and cost-saving opportunity. Additionally, two-thirds of our Fiverr gross ads are taking the one gig product, which is higher than the proportion of customers taking one gig on our HFC plans, representing a great opportunity to differentiate our fiber offering and increase our revenue. To summarize, we are very pleased with our network performance and remain focused on continuously monitoring and upgrading our network to support demand. Turning to slide nine, the completion of one gig availability across 100% of the optimal footprint earlier in 2020 increased our opportunity to continue to upsell customers to higher broadband speed tiers. Our one big customer penetration increased to 7.8% in Q4, up from 5.7% in Q3. Our average download speeds have more than doubled in the past three years to 283 megabits. We ended the year with over 55% of our base still only taking broadband speeds of 200 megabits or less, which represents a meaningful opportunity for us to continue to deliver faster speeds to our customers. Turning to slide 10, we wanted to remind you once more of our long-term network strategy. In 2020, we were able to meaningfully accelerate our organic homes past growth to the highest ever level and bolted on additional homes with the acquisition of Service Electric. We are extremely committed to expanding our footprint organically and or inorganically on a go-forward basis as a key growth driver. Our build plans include a combination of accelerating our new build deployment, particularly around the edges of the Sunling footprint, and fill-ins in the Optimum footprint, with the goal being over 150,000 new homes constructed in 2021, and with further acceleration from there. Remember, we hit approximately 40% penetration within 12 months of arriving in a new market, a very positive result. We are also continuing to upgrade about 400,000 homes in the Sunling footprint through full upgrades of RF equipment, including new amplifiers and additional node splits to be up to one gig capable. Finally, we continue to advance our fiber to the home plan ending 2020 with about 1 million homes passed ready for service. Compared to our average one gig selling of 41%, two thirds of our fiber customers are taking one gig. We are confident that accelerating fiber deployment gives us many opportunities to deliver not only CapEx and OpEx efficiencies, but drive long-term top line growth as well. On slide 11, turning to business services, we saw resilience in both our SMB and light path businesses during this time, and still achieved full year and fourth quarter adjusted revenue growth. Business services revenue grew 2.3% year over year in 2020, excluding RSN installed credits, or up plus 1.8% on a reported basis. In the fourth quarter, Reported business services revenue was flat or up 0.6% adjusted for RSN and storm credits. As we previously flagged, the lower customer growth in the earlier part of 2020 following the lockdown did lead to a slowdown in revenue growth from our usual 4% to 5% range and is likely to remain at this lower level for 2021 as sales and install activity remain relatively subdued before re-accelerating into 2022. However, we are seeing some unique growth opportunities during this time from corporations rethinking their real estate needs and upgrading connectivity at their corporate headquarters to increase demand for remote learning. In Q4, we also completed the sale of a minority stake in a LightPath fiber enterprise business to Morgan Stanley Infrastructure Partners and are excited to have appointed a new dedicated management team to accelerate LightPath's growth. In the SMB space, although we are seeing vacancies and some ongoing uncertainty regarding the pandemic, we are seeing strong activity through our call center and e-commerce channels, as well as ongoing demand for higher-speed tiers. Turning to our news and advertising business on slide 12, we are extremely pleased to report full-year revenue growth up 9.1% year-over-year and down only 3.3%, excluding political. In Q4, we posted revenue growth of up 29.7% year-over-year in Q4, or up 3.5% excluding political, compared to a decline of 6.6% in Q3, a clear improvement sequentially. In addition to the boost from political, which was peaked in October, we saw continued recovery in local advertising for the pandemic-related trough in Q2, including after the November elections when linear spot inventory became more readily available. We continue to benefit from positive viewership trends with a 90% increase in Shutter website traffic year-over-year and 112% increase in users year-over-year. News 12 TV viewership is up 6% on a year-over-year basis. While there was some negative impact in shifting collegiate sports schedules, sports and ancillary sectors recovered in the fourth quarter as did autos and programmer tune in spend with new season launches we anticipate this recovery to continue into 2021 and remain cautiously optimistic about our news and advertising business turning to our mobile business on slide 13 we remain pleased with our performance after our full year of service we see ongoing momentum with our new tiered data plans of two-thirds of our gross ads now taking our one gig and three gig plans at the end of 2020. The top priority for our mobile business is an ongoing focus on profitability, and we continue to refine our plans based on that target and broader market environment. We are also pleased to announce that as of the end of January, approximately 90% of our devices have been migrated to the new T-Mobile network, delivering a premium network experience. We have already seen a reduction in drop calls of about 15% since prior to the migration, an encouraging trend. This is another step towards our greater goal of continuing to improve customer service and broadening our product offerings, including the expansion of our handset lineup and launching our 5G service. About 40% of our retail stores remain closed, which continues to impact our volumes. However, we still managed to reach 3.6% penetration as a percentage of our total unique residential customer base. To summarize, we remain excited about the opportunity for further growth and churn reduction from bundling with our cable offerings. And with that, I'll turn this over to Mike to discuss the financials in more detail.