Altice USA, Inc.

Greetings and welcome to the Altice USA third quarter 2024 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce you to Sarah Friedman with Investor Relations. Thank you, Sarah. You may begin.

Thank you. Welcome to LTCUSA Q3 2024 Earnings Call. We are joined today by LTCUSA'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. Now turning over to Dennis to begin.

Thank you, Sarah, and thank you to everyone for joining us today. As I reflect on my two years at Optimum, I'm incredibly proud of how far we've come in building the foundation we envisioned. Phase one of our transformation was to stabilize our operations, create a dynamic and innovative culture, and focus on delivering superior products and services over our award-winning networks. We strengthened our leadership bench, broke down organizational silos, and began to implement process tools and system improvements based on feedback from customers and employees. It was a proud moment when we were certified as a great place to work this year because it marked a turning point in our culture, reflecting the revitalization and pride our people now feel to be part of Team Optimum. Quality and value are paramount to the transformation of our customer experience, and so we prioritize both. To drive quality products, quality networks, and quality service, we have made fundamental and comprehensive changes to our operations, which have led to a significant reduction in outages, more reliable products, a smoother fiber migration journey, and strong cross-functional partnerships across our frontline organizations. This work has resulted in recognition from organizations like UCLA, PCMag, CNET, ACSI, and others, acknowledging our progress in customer experience, network excellence, and service leadership across our footprint. From a value perspective, we repositioned Optima Mobile and launched a true mobile strategy. We established simplified and transparent pricing and right-size speeds for almost 1 million customers. This has allowed us to meaningfully stabilize churn in the face of increasing competition from fixed wireless and overbuilders. Simultaneously, we implemented a new level of financial discipline across every area of the business, which has enabled us to stabilize OPEX, capital intensity, and ARPU erosion. Phase one included delivering over $500 million of improvements across operating expenses and capital expenditures. When I started, OPEX was run rating over $2.7 billion and was on a trajectory to keep climbing. We are now run rating closer to $2.6 billion with a path to moderate this further over time. Our capital spend was $1.9 billion in full year 22. This year, we expect $1.5 billion of capex, a reduction of approximately $400 million in two years. In full year 22, our residential ARPU declined over 2% year-over-year, more than a $3 decline. Since then, we've sustained residential ARPU above $135 each quarter, despite challenges from video declines. We successfully moderated this rate of decline in 23 and anticipate further improvement this year. We are proud of the progress that we have made, but we know we have much more work to do. We are now progressing to phase two of our journey, which is to accelerate business transformation. This work will position Optimum to succeed competitively, grow new revenue streams, moderate OPEX, deliver more value to our customers and communities, and return to sustainable growth. In our conversation today, I look forward to providing you with a view into how we expect this transformation to improve our financial and operational trajectory and generate shareholder value. Before diving into the details, I want to take a moment to acknowledge those affected by the recent hurricanes in the southern states. Our hearts go out to all these communities. Hurricane Helene impacted some of the communities we serve in North Carolina. I'm incredibly proud of our team's swift and coordinated response, showing how much faster, more organized and effective we have become under our current leadership. Our teams mobilize quickly to deploy Wi-Fi access and charging trailers, provide connectivity for emergency shelters, issue support to our customers, and restore service quickly. Our commitment to our communities remains stronger than ever as we continue to support their rebuilding and recovery efforts. Let's now turn to slide three to review our business performance. In Q3, we reported revenue of $2.2 billion, adjusted EBITDA of $862 million, and cash capex of $359 million. As we discussed previously, the macroeconomic environment, video cord cutting, and increased level of competition continued to weigh on our Q3 results. However, we remain focused on the elements within our control, driving fiber penetration, accelerating mobile line additions, achieving relatively stable ARPU despite pressure from video losses, and maintaining near record low levels of churn. We also improved capital efficiency year to date and generated free cash flow, all while continuing to improve quality, customer experience, and operational metrics. Overall, along with other operators within our footprint, we continue to experience low levels of activity this quarter, both lower gross ad activity and less disconnect activity. However, we made notable progress in direct competition against certain key competitors. And we accelerated positive momentum around our fiber internet and mobile products, which remain key growth engines for the company. We added 47,000 fiber net additions ending the quarter with 482,000 fiber customers. We achieved penetration of approximately 17% across our total fiber footprint with some markets achieving closer to 30%. This was one of our best quarters for fiber migrations, accounting for over 70% of our fiber net ads, underscoring the strong demand among our base. In Q3, we achieved our strongest mobile performance in four years, adding 36,000 new mobile lines, reaching 420,000 lines at the end of the quarter. We anticipate continued acceleration in mobile as we introduce competitive new offers, expand our product portfolio, maximize the strength of our sales channels, and further scale mobile sales into care and retention. As mentioned, continued low levels of activity coupled with continued competitive pressure across our footprint contributed to broadband subscriber net losses of 50,000 in the quarter. I'd like to provide more insight into the trends we're observing within our footprint. Most of the year-over-year decline in our gross ad performance was seen within our income-constrained customer segment. Contributing to this was the sunset of ACP and fewer additions in our back-to-school university footprint. The roll-off of the ACP program earlier this year had an impact in Q3 on both gross ads and disconnects. We experienced approximately 10,000 ACP-related disconnects in the quarter, primarily driven by non-pay disconnects. Overall, on disconnect trends, we saw strong performance in the quarter relative to our competition. Disconnect volumes improved year over year and outperformed our competitors' rate of loss based on third-party open signal data. Excluding the churn impact from ACP, our underlying disconnect trends have improved. This improvement was in part related to less switching activity. However, it also reflects the continued improvements from our network enhancements, focus on first-time rights, and the introduction of AVA, our internal AI virtual assistant, which helps guide our agents to address the specific individual needs of our customers. From a gross ads perspective, we continued to experience lower activity, which was partially offset by wind share improvements against fixed wireless, mature fiber operators, and steady progress in our new build areas. Last quarter, we noted that July showed stable year-over-year trends. However, as we progressed through the quarter, performance declined due to a slowdown in overall switching volume within our footprint, overbuilders launching in incremental markets with aggressive acquisition offers, and ACP non-pay churn weighted towards September. Lastly, to note, our Q3 ending subscribers and net additions also included a one-time positive adjustment to align to the company's bulk residential subscriber count, resulting in an increase of 4,700 residential customer relationships, 3,800 broadband customers, and 5,200 video customers. Next, I'd like to highlight a few key accomplishments in Q3 related to our financial discipline, go-to-market strategy, and critical network and service enhancements. We demonstrated gross margin expansion of 50 basis points year over year, and we delivered free cash flow of approximately $100 million year to date. We opportunistically used free cash flow for debt repayment, reducing our revolving credit facility by $100 million this quarter. And we now anticipate full-year capital expenditures of approximately $1.5 billion while maintaining high-quality network investments. This is made possible by our new network leadership team's focus on strategic project prioritization, stabilizing network operations, and driving enhanced project efficiencies. Thanks to these efforts, we are implementing a multi-year network strategy that ensures we can compete most effectively at the town and local level. On our go-to-market, we continue to evolve our offers, base management strategy, and drive convergence to effectively compete in every market we serve. In September, we rolled out our latest offers, which enable customers to mix and match the services they take through Optimum, with broadband as the hero product mobile, and our new TV packages as add-ons and a three-year price block for taking all three products. We are pleased with the initial results, including an increase in customers taking multiple products. Additionally, as it relates to our new strategic approach to video, I'm pleased to share that this month we completed the launch of our full suite of exciting new TV packages. Entertainment TV, Extra TV, and Everything TV which deliver content tailored to what customers want at compelling new price points, all available over IPTV and alongside a customer's favorite streaming services. Entertainment TV, which features over 80 top-rated entertainment channels at a $30 price point, has been available since the end of the summer and is already seeing a strong response from customers even before a marketing ramp-up. Starting today, we began offering Extra TV, which brings customers over 125 entertainment, live news, and national sports channels for $85. And Everything TV, which is all that plus regional sports networks and premium networks for $140. Video remains an important product in our portfolio. And together, these three TV packages bring to life the new vision of Optimum TV. which helps break conventional all-or-nothing options to better provide content geared toward customers' unique and modern viewing preferences. These options are made possible by more flexible programming agreements, which enable an improved margin profile. And last, on our go-to-market strategy, we are taking disciplined steps to improve our share of connects, especially in an environment of overall low growth stat activity. We are actively optimizing our sales channel mix, revitalizing our sales teams, and implementing more performance-driven marketing efforts to stay ahead in the evolving marketplace. On our network and service enhancements, we continue to increase fiber passings and we'll end this year as planned with nearly 3 million passings. As a result of our capital improvements and strengthened operations, We have increased our capacity to handle more fiber migrations and significantly improved the migration process as we continue to ramp up on marketing fiber. And as we've discussed over the last several quarters, we have made significant strides in strengthening our networks and operations. This has led to marked improvements in service call and visit trends across our customer base. reflecting our ongoing commitment to enhancing our network and customer experience. Last quarter, we outlined key elements of our long-term roadmap. Turning to slide four, I'd like to dive deeper and size some of the items that we consider potential near-term opportunities. The main drivers of future top-line potential are from improving broadband subscriber trends, as well as better managing our total subscriber base and increasing the number of products each customer takes, with a path to grow mobile to over 1 million lines by 27. In addition to the revenues generated by our core products, we have an opportunity to drive growth through value-added services. This includes our existing portfolio of value-added services, such as the Total Care Support Plan, which fully launched in April of this year at a price point of $15 per month. It also includes the introduction of new value-added products. For example, early next year, we will begin offering customers whole home Wi-Fi to support their evolving connectivity needs and begin offering them the ability to purchase their favorite streaming services directly through Optimum to support their evolving entertainment needs. Products such as Total Care, whole home Wi-Fi, and mobile device insurance have ARPUs in the $10 to $20 range. These products have low to no penetration, and as we launch more over the coming quarters, we are benchmarking against industry standards of over 20% customer base penetration. This represents a meaningful opportunity to drive sustained improvement in ARPU trends over time, while enhancing the value we provide to our long-tenured customer base. Within B2B, we continue to introduce new products to better serve our small and medium business customers. In Q4, we're excited to launch our new connection backup service, broaden our security offerings, and upgrade our pro Wi-Fi solution. These are products with strong ARPUs, which we can drive meaningfully into the base and at point of sale. We have much more to come in B2B by expanding managed services, enhancing security features, and growing our current product offerings. Next, a moment on Fiber. We have a strong portfolio of network assets, including our HFC and Fiber networks, both of which continue to deliver exceptional experiences for customers. Fiber is a differentiated and premium network asset that provides unmatched performance, scalability, and reliability. and we are still in the early stages of unlocking the full potential of this powerful network. Our objective is to upgrade customers to fiber, which delivers many benefits, including elevating customer lifetime value, lowering churn rates, and driving higher ARPUs over time. It also enhances our network efficiency and reduces long-term operational expenses by streamlining infrastructure and support needs. We expect to reach the milestone of 500,000 fiber customers before the end of this year. And through more targeted acquisition and migration strategies, we believe we have a path to grow our fiber base to more than 1 million customers or 30% penetration by year end 26. Moving to the next section, we continue to find meaningful ways to drive operational efficiencies. As we continue to improve our gross margin profile, we are looking to achieve around 70% gross margin by 2026 by optimizing our programming agreements, scaling up our mobile base, and growing our mobile insurance products and accessories. As we are sharpening our focus on business transformation, we are evolving our operational models to fuel growth, simplifying our processes, and leveraging and embracing technology solutions. This includes AI, machine learning, digitization and automation, and institutionalizing experimentation as a core mindset for our people. This work will position us as a digital native company, streamline costs and deliver measurable progress by 2025, including a reduction in our operating expenses over time. We've identified meaningful opportunities to drive efficiencies while simultaneously growing the business and enhancing the customer experience. Over time, these efforts support a return to normalized adjusted EBITDA margins near 40%. Finally, our goal is to sustain a capital structure that supports our long-term operational roadmap. As it relates to capital expenditure efficiency, We will be working towards a path to annual capital spend of under $1.3 billion in 2025, while continuing to invest and upgrade our fiber and HFC networks. Through improved operations, including proactive maintenance efforts and better field productivity, we are maximizing the impact of each dollar invested. In summary, Successfully implementing these opportunities could improve our free cash flow by up to $400 million over time. We remain steadfast on our journey to reshape the business, and I'm confident that we are on a path to return to sustainable long-term growth to deliver value to our shareholders. With that, I will now turn it over to Mark to review our quarterly performance in more details.