Altice USA, Inc.

Hello, and welcome to the Altice USA Q4 and full year 2023 earnings results conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad, and we ask that you please ask one question and one follow-up. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Sarah Friedman, Investor Relations. Please go ahead, Sarah.

Hello and welcome to the Altice USA Q4 and Full Year 2023 Earnings Call. We are joined today by Altice USA's Chairman and CEO, Dennis Matthew, and CFO, Mark Sirota, who together will take you through the presentation and then be available for questions. As today's presentation may contain forward-looking statements, please carefully review the section titled Forward-Looking Statements on slide two. Dennis, please go ahead.

Thank you, Sarah. I'm pleased to be here with all of you to review our Q4 and full year performance. Before we start, I want to express my gratitude to our dedicated teams and their families. In 2023, Optimum began a transformative journey marked by the introduction of a new mission and strategic priorities to deliver improved customer and employee experiences. It's only because of their dedication and support that we were able to deliver on the commitments we set forth. We did what we said we were going to do, and it took everyone to do it. I remind you that in the beginning of the year, we established our new optimum mission, to be the connectivity provider of choice in every community that we serve. And we introduced the four strategic priorities that would position us to return to sustainable customer revenue and cash flow growth. They are to delight with the best customer experience, grow with the best customer relationships, connect with the best networks, and inspire with the best people. Throughout this year, we took steps to lay the foundation against these pillars. And while we are in the very early innings of our turnaround, I'm incredibly proud that we achieved our full year objectives and began transforming every area of the business, which has set the stage for 2024. Let's review some of the achievements beginning on slide three. Priority number one was to transform the culture, and we did just that. We brought in amazing talent to complement our teams and to lead through operational, financial, and cultural transformation. The successful integration of a new CFO and a new telecoms executive leadership team, including more than 100 new leaders across our organization, has equipped Optimum with a best-in-class team with decades of global and U.S. broadband, mobile, and video experience. We introduced a regional operating and leadership model with a localized go-to-market approach. paving the way for a hyper-local presence in the communities we serve. And we drove employee engagement by listening and acting so all of our employees are empowered to represent Optimum at its best. Second, we acted with financial discipline. We changed how our finance organization works with our operational teams, embedding a culture to help drive the business and make smarter decisions. And as a result, we have seen stabilization in our adjusted EBITDA margins with full year 2023 EBITDA margin of 39.1%. We drove capital intensity down throughout the year from the recent peak in Q1 of over 25% down to under 13% in Q4 of 2023. We committed to being positive free cash flow in the full year and delivered $122 million of free cash flow to improve top line EBITDA and CapEx trends in the back half of this year. We were proactive in our debt maturity management, clearing out the 2024, 25 and 26 maturities, giving us runway to focus on operating the business with no maturities until 2027. And we managed our operations and financial profile with a focus on our core growth businesses. As evidenced by the recent sale of Cheddar News, we will continue to strategically evaluate our operations to maximize our focus on the core business, positioning ourselves for sustained growth and success. Next, we introduced an improved base management strategy. that will enable us to profitably evolve the price-value equation for our base. Specifically, you saw a few weeks ago we announced changes to our fiber and HFC rack rates for everyday pricing and began right-sizing speeds for customers as part of our efforts to simplify and normalize pricing and packaging. We also introduced artificial intelligence and machine learning capabilities leveraging customer lifetime value models to advance our frontline's ability to more effectively manage our base. Looking ahead, we will continue to take a disciplined approach to profitability while ensuring we offer the best value for each customer so we can reduce churn and grow ARPU over the long term. On the customer front, I'm pleased that we meaningfully accelerated mobile and fiber growth We set a new mobile strategy this year that enabled mobile line net additions of 34,000 lines in the fourth quarter, an acceleration of more than eight times in our pace of mobile growth compared to Q4 of the prior year. We also sustained improvements in fiber penetration, now reaching over 12% at the end of 2023. The growth in both mobile and fiber are supported by our sales optimization efforts. driven by a new winning sales culture, stronger channel performance, a clear retail strategy, improved compensation models, disciplined performance management, and attractive clear offers like Optimum Complete. And finally, we made significant improvements in the customer experience, advancing CX as our best product at Optimum. We prioritize delivering top-tier network quality and providing exceptional experiences for our customers precisely when they depend on us the most, be it for school, work, healthcare, or family moments. This year, we also launched 8-gig symmetrical speeds on our fiber network to more than 2.7 million customers, making us the nation's largest 8-gig provider. This continues to be a strong competitive advantage everywhere we overlap with a fiber competitor in the Northeast. We successfully implemented new self-service tools such as the MyOptimum app, and we advanced other self-service options like chat and a more customer-friendly portal. we also placed greater emphasis on self-installed and we've seen the number of self-installations nearly double in the full year 2023 compared to the prior year. Everything we have improved in terms of quality products, quality network, quality service, and quality teams is translating into better NPS. Furthermore, it's resulting in significantly fewer service calls and truck rolls, which are leading indicators of improved performance, giving us confidence that our strategy is working and we will return to broadband customer growth over time. In summary, 2023 was about people, strategy, and process. I'm pleased that we have vastly more capabilities, more operational rigor, more tools, and more execution discipline to be able to drive a more effective go-to-market strategy. deliver high-quality experiences, enhance our base management, and stabilize our business. With all of this in place, we have strong levers to pull in 2024 as we pave the way to return to long-term sustainable growth. Let's turn to slide four to review them. First, we will continue to evolve our connectivity portfolio and value proposition to meet changing customer demands while driving improved ARPU trends across our residential and business divisions. Broadband and mobile remain our anchor products, supported by an attractive bundle offer with Optimum Complete. As we move through 2024, we will better leverage assets like fiber as we sell in gig and multi-gig speeds combined with mobile to give customers the best connectivity experience for the best value. On the video side, in 2023, we launched Optimum Stream as our main video product, which blends a streaming experience with a linear video viewing experience through the Optimum TV app. We will continue to carefully evaluate how we go to market with our video product to maximize both customer experience and profitability and have plans to launch new video package options later this year, giving our customers greater flexibility and choice. With respect to our business services segment, I previously mentioned that we have significant potential on the horizon. In Q4, we saw B2B revenue grow 1% year over year. We launched Optima Mobile for SMB last month, and we will continue to expand the B2B portfolio over the year, which will give us additional runway to support ARPU expansion in our B2B segment. We are confident we will continue to see improvement with additional products and a new dedicated team led by our President of Business Services, Mike Parker, who joined the organization in December. As we continue to evolve our operational approach, We are working in parallel to infuse innovation across the business. For example, we're exploring a host of digital engagement and generative AI tools to better engage and interact with our customers. Our aim is to emerge as industry leaders dedicated to seamlessly embedding innovation into every aspect of our business. This commitment extends across customer experience, product development, operations, and beyond. Next, As I shared earlier, in 2023, we took initial steps to introduce a more thoughtful approach to pricing and packaging. In 2024, we will drive this new strategy even further with a base management program focused on retaining profitable customers, improving ARPU trends, strengthening our competitive position, and reducing churn. Mark will review this in more detail shortly. Third, we are focused on fiber penetration growth and strategic network expansion in 2024. We continue to see positive trends in churn reduction, ARPU, and increased satisfaction scores amongst our fiber customers. Given the trends and performance, we will continue to increase penetration of our fiber network and strengthen the experience of fiber migrations for our customers. Our current footprint today covers some of the fastest-growing cities in the country. That, combined with our more proactive approach in how we go to market in new communities, sets us up well to drive growth by expanding our footprint through new builds and edge-outs. This brings us to our fourth lever, which is our segmented hyper-local go-to-market approach and a new brand strategy. In support of these plans, in Q4, we hired an experienced chief marketing officer to elevate our go-to-market and brand strategy. We also brought on a new leading advertising agency of record and plan to reintroduce our brand and a new platform, new values, and evolved creative positioning to enhance our brand image in the market. This new optimum brand and marketing approach combined with our newly formed regional optimum market structure will ensure that we are resonating with customers and that we are competing for every jump ball to drive growth. Next, we will continue to simplify customer interactions and experiences. We make great progress in 2023 on this front and continue to upgrade tools, processes, and technology to simplify how our customers interact with us and how we communicate with them. We remain focused on enhancing our reputation as a company that's easy to do business with and one that will solve issues right the first time, every time. And this customer-centric approach will contribute to us structurally reducing operating expenses. CX remains foundational to all the work we do across the company and is embedded in our company culture. And last, as we continue to focus on fiber upgrades, DOCSIS upgrades, and total passings expansion, we are committed to doing so with financial discipline, aiming to keep capital intensity stable year over year in line with 2023 levels. Now, before I hand it over to Mark, I want to reiterate that the strategy we put in place one year ago is already driving operational improvements and positioning us for growth. We will continue to operate with financial discipline, with deliberate capital allocation and balance sheet management. We are focused on execution and efficiency as we continue to take the actions necessary to improve our performance and strengthen the business. This includes a heightened focus on our core operations and a strategic effort to maximize our total asset portfolio. I am extremely proud of the goals we accomplished in 2023 and building off this foundation, I am fully confident that we are on the right path to return to sustainable long-term customer revenue and EBITDA growth over time. And in 2024, we will take another step in the right direction. With that, I'll turn it over to Mark to review our Q4 and full year performance in detail.