Altice USA, Inc.

Good day. Thank you for standing by. And welcome to the Altice USA Q2 2021 Earnings Conference Call. 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 that session, you will need to press star 1 on your telephone keypad. If require any further assistance, please press star 0. Thank you. I would now like to hand the conference over to your speaker today, Mr. Nick Brown. The floor is yours.

Thank you. Hello, everyone, and thanks for joining. In a moment, I'll hand you over to LTCUSA CEO, Dexter Gray, and our CFO, Mike Groh, who will take you through the presentation, and then we'll have time at the end for 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 jump into a summary of our second quarter results, I once again want to express my gratitude for the continued dedication and commitment of the LTTSA team, without which we couldn't and wouldn't have been able to navigate the pandemic as well as we have. Starting on slide three, we saw an acceleration revenue growth in the second quarter to 1.7% year-over-year, with a particularly strong rebound in our medium advertising business. We continue to deliver high broadband revenue growth up about 8% year-over-year, although we have seen elevated move activity recently as consumers return to home locations, as well as the protracted impact of several pandemic-related regulatory programs and hurricanes. Despite these headwinds, we reported flat organic broadband customer growth in Q2, or plus 30,000, including our recent Morris broadband acquisition. We remain confident in faster customer growth going forward from our accelerated pace of footprint expansion, sudden cable network upgrades, and optimum fiber upgrades. We also continue to invest in innovative new products, more specifically our optimum stream device, which I'll come back to shortly. Turning back to financials, adjusted EBITDA was flat year to year, even with some tougher comparisons, which Mike will touch on later. We delivered another strong quarter of free cash flow at $406 million and just under $1 billion for the first half of the year alone. This has supported $726 million of share of purchases year-to-date or just under half of our full-year target, all of which gives us the confidence to reiterate our 2021 financial outlook. Looking at Q2 revenue growth in more detail on slide four, we can see an acceleration from the first quarter, growing at 1.7%. The residential revenue was flattened year-over-year, the personal growth flow compared to the peak we saw at this time last year. Business services growth accelerated to 1.8%, supported by more reopening activity. Finally, news and advertising grew very strongly, up 36.4%, with a much easier year-over-year comparison. Turning to slide five, focusing our residential business. We report an organic net loss of 12,000 residential customer relationships, excluding more for our VAMS acquisitions, which separately added 35,000 unique customers since the closest acquisition within the quarter. To provide some context, the second quarter is usually seasonally different, but as I flagged earlier, we did see a noticeable pickup in move churn as markets are reopening more widely. This includes customers leaving our suburban footprint around New York and going back to New York City, which, remember, is outside of our adventure footprint. For illustration, this move turn was more in line with the second quarter of 2019. We estimate we actually would have been slapped in terms of customer relationships and would have reported 14,000 broadband additions rather than the new coast of Europe. Additionally, in the quarter, we disconnected about 7,000 customers for nonpayment, that were previously protected by pandemic-related regulatory programs, meaning the SEC Pledge or New Jersey Executive Order, or those affected by prior hurricanes in Louisiana. In other words, without the impact of elevated mood turn and pandemic programs and storms, we would have been at plus 21,000 data net ads and plus 7,000 customer relationships for the quarter. Recall that New York was the latest state to prevent us from disconnecting customers with legislation enacted in May this year. While this New York order was lifted at the end of June, coinciding with the end of the declared COVID-19 state of emergency, it has led to some customer and revenue disruption, which will carry over into the third quarter. We've now finally been able to resume our normal disconnect policies across the whole company, and so our trend should normalize by the fourth quarter. However, if elevated move churn persists, as we have continued to see it recently, it may be difficult to match the sort of 2018 and 2019 organic broadband customer growth for this year. Against this backdrop, our strategy remains the same, which is to achieve faster broadband customer and revenue growth by accelerating the pace of new builds and network upgrades, including our fiber rollout. We are expanding our footprint and will be delivering services which are consistently better than those offered by our competition which sets us really well for the next few years. On slide six, we would like to provide an update on some data usage trends. Average monthly data usage per customer was 445 gigabits per month in Q2, with broadband-only customers using closer to 600 gigs per month. Video streaming remains the biggest driver, accounting for about two-thirds of data usage, and this is also helping drive demand for higher broadband speed. Remember, over 50% of our customer base still only takes 200 megabits per second or lower, so we still have a lot of room for growth here. 42% of our growth additions are taking one-gig broadband speeds in areas where it is available. We're being very optimistic about the one-gig and multi-gig opportunities ahead of us. Slide 7 shows us how much success we're having right now in continuing to upsell customers to higher broadband speed tiers. Our one gig customer penetration increased to 11.3% in Q2, up from just 3.7% a year ago. Our average download speeds have nearly doubled in the past three years to 316 megabits. And as you can see, that this is accelerating as customers are increasingly taking the one gig service. Tony, for flying speed, we want to update you on our long-term network expansion and fiber strategy. On the left, you can see we're on track for at least 150,000 new homes built, mostly edging out around the 17th footprint, with more broadband inorganically adding another 90,000 homes packed in North Carolina. This is an acceleration of our prior run rate of new builds. We are still achieving about 40% after the first year of expanding out our network into new areas, so we're getting a very good return on this investment. Separately, we are continuing to upgrade existing homes in the southern footprint in areas where customers previously only received a maximum of 150 megabits per second, taking this up to either 400 megabits or one gig. On the run, as you can see in Q2, we reached about 1.1 million fiber homes passed ready for service. We are still on track to pass half a million homes this year with the material pickup right now in the summer months. Our penetration of fiber passings is now up to 4.3%. compared to just 1% in Q2 2020. About two-thirds of our fiber growth ads are taking our symmetric one-gig product, which is our best service available today. But we are focused on making multi-gig speeds available as soon as possible and should start marketing fiber more actively in the next two quarters. Moving to slide nine, last week we announced our latest product, Optimum Stream and Sudden Stream. This is a new 4K streaming device powered by an Android TV operating system. Customers will have access to a wide range of content, including over 50 streaming TV channels and all of the most popular streaming apps pre-sold, with thousands more available in the Google Play Store. The new streaming device is available for free to broadband-only customers who take our one-day service or the highest broadband speed available in their service area, and is available to other broadband-only customers for just $5 per month. We believe this offers a really good alternative for our broadband customers that don't want to take a legacy cable TV bundle. Last week, we also announced the rebrand of Altice Mobile as Optima Mobile, which is the first step in our plan to align all of our connectivity brands, including Sunlink Adventures, under one national opt-in brand. Recall, we recently migrated all of our active mobile customers to two mobile networks, And as we're seeing now much better customer service, this is a great time to rebrand and align the business more closely with our fixed broadband business. Austin Mobile had approximately 180,000 mobile lines as of the end of June, reaching 3.8% penetration of LTCUSA's residential customer base, with revenue in Q2 of 4%. On slide 10, on business services, I'm pleased to say revenue trends continue to recover across our SMB and light path businesses. as customer growth has been much better in recent months. In fact, Q2 saw our best ever SMB customer net ads in four years. Business reopening activity has been accelerating as vaccination rates increased and operational restrictions relaxed. Restaurants, theaters, health clubs, travel, and tourism are examples of businesses and industries that started to reopen more widely in Q2. The swing back around the New York tri-state area is more dramatic because the COVID crisis generally helped it be harder. We still see a higher than normal retail and commercial office space vacancy rate, which means many businesses are still missing, but the situation is improving. As K-12 and college kids safely go back to school, we believe this will be the next big step up for the economy and our B2B business. During the quarter, Lifepath also announced the expansion of its network into Boston through three acquisitions and into Queens through new organic fiber build. This strengthens Lifepath's presence across Tier 1 markets in the Northeast, and we're making investments and growing the sales team to drive penetration. Focusing on our news and advertising business on slide 11, we saw very strong growth this quarter, up 36%, as remember Q2 last year saw the biggest negative impact from the pandemic on our advertising business. Local, regional, and national advertising markets are all recovering, which we expect to continue. And we saw additional growth in the recent New York mayoral and New Jersey gubernatorial election races. We still expect revenue for the whole of 2021 will be flattish on the year-over-year basis, though, as we will have a tougher comp in the second half due to the political comp. And now I'll hand you over the mic to go over the financials in more detail.