Altice USA, Inc.

Greetings, and welcome to the Altice USA Q4 and full year 2024 results conference call and webcast. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. Our question and answer session will follow the formal presentation. You may press star one on your telephone keypad to be placed into question queue at any time. We ask you please ask one question, then return to the queue. 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.

Thank you and welcome to the Altice USA Q4 and Full Year 2024 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. Now turning over to Dennis to begin.

Thank you, Sarah, and thank you, everyone, for joining us today. 2024 was a transformative year for Optimum, and I'm incredibly proud of how much we achieved. As we've looked back on the year, our efforts, performance, and progress were all anchored in our clear focus on transforming the business through several foundational elements. We'll review these on slide three. First, our phase one transformation was driven by an experienced team of executives with deep, hands-on expertise in day-to-day operations and transformation. These are operators, not just executives, bringing decades of experience in strategizing, competing, and executing at the highest levels. They are data-driven, results-oriented, and relentlessly focused on improving every aspect of our business. From optimizing sales channels and enhancing customer experience to leveraging automation and refining cost structures, our operational and financial discipline is delivering measurable improvements. We've streamlined processes and improved decision-making through real-time data insights, which have strengthened efficiency, reduced costs, and positioned us for sustainable revenue and subscriber growth. Next, we continued accelerating our award-winning networks and delivering best-in-class products and services fueled by innovation and advanced tools. By prioritizing customer-first solutions, we enhanced value for our customers by elevating our network quality, transforming our customer experience, and delivering the products and packages with the value our customers want. Our networks are more powerful than ever. And in 2024, we developed a strategic network roadmap, which includes fiber expansion and a multi-gig rollout across our footprint through network innovations and disciplined investments. In 2024, we also achieved growth in key strategic areas like fiber and mobile, paving the way for additional top-line opportunities in 2025. With a disciplined approach in operational and capital efficiency, we remain free cash flow positive, reinforcing our financial strength and flexibility. And despite higher cash interest in 24, we were able to grow free cash flow. We've reduced CapEx from recent multi-year highs and continue to expand network capacity at more efficient and sustainable spending levels. And at the heart of our transformation is a dynamic and forward-thinking culture that empowers our team to innovate and implement change. We have fostered collaboration at every level and built a culture that drives strategic growth and inspires excellence. Our ability to operate as one optimum allows us to put the customer at the center of every decision and positions us for long-term growth. During our last earnings call, we discussed how we are building on this foundation as we embark on phase two of our transformation. which includes executing on business acceleration opportunities that will deliver maximum value for our customers, communities, and shareholders. Now, turning to slide four, we will review key milestones showcasing that our efforts to improve our financial and operational trajectory remain on track. Q4 marked our best-ever quarter for FiberNet additions of 57,000. a 22% increase year over year, driven by more than double the pace of fiber migrations. And mobile growth of 40,000 line net additions is our best performance in the last five years, rounding out an impressive 24 for our mobile business, which saw the pace of mobile line net additions grow by almost 70%. And we expect mobile line growth to continue to accelerate in full year 25. We ended the year with a strong base of 4.3 million broadband subscribers and 460,000 mobile lines. Broadband subscriber net losses in the quarter were 39,000, which reflected the impacts of the hurricane in North Carolina and various go-to-market and base management pilot programs. Overall, move volume remained low, with home sales falling to the lowest levels in nearly 30 years, This continued to pressure growth ads due to low overall connect volumes, particularly in the income-constrained segments. We also saw many positive trends that we are leaning into more strategically as we head into 25. Specifically in Q4, churn remained low as we focused on implementing strong base management strategies. In fact, churn improved year-over-year in the East footprint, comprising of our New York tri-state markets, which contributed to improved Q4 trends in the East, representing the best quarterly performance of the year within this footprint. And we saw stronger wind share rates against established ILAC and overbilled fiber operators in mature markets across our footprint. The West footprint remained more challenged by incremental fiber overbuilders, as well as fixed wireless. We also have a greater proportion of income-constrained households in our West markets, which remains pressured. In 25, we are launching a new income constraint program featuring unique offers designed to attract and retain customers with worry-free pricing, easy sign-up, flexible payment options, and meaningful perks and add-ons, and a mobile offer as well. Overall, we are focusing on strong base management tactics, quality network enhancements, and improved go-to-market strategies to compete with new market entrants. Optimum's unique attributes of size, speed to market, ability to act locally, and a robust expanding product set position us to act with greater flexibility and execute innovative strategies that will allow us to maximize both rate and volume based on the competitive landscape. We have run several small pilots in the West which have yielded positive results. For example, in Q4, we introduced new competitive pricing in select markets, where we face intense competition, leveraging a hyperlocal approach. Comparing the months before and after these pilot market launches, we saw growth in penetration, sales, connect rates, and market-level revenue. Building on this success, we plan to scale these hyperlocal tactics in the coming months, tailoring strategies to the unique competitive dynamics of each market to drive further growth. Our performance is highlighted by revenue achievements in key areas. Specifically, residential mobile service revenue and LightPath both achieved their highest ever revenue in full year 24, showcasing strong growth and market momentum. Next, we continued to evolve our product portfolio and enhanced our customer experience. In 24, we grew our mobile portfolio to include tablets and device insurance. and we expanded the availability and functionality of our optimum stream TV experience. We launched new value-added services, including total care, premium support, wireless backup solutions, as well as pre-new video offerings that provide customers more choice and flexibility. We are seeing early success with these new products, from growing attachment rates to creating stickier customers with a higher customer lifetime value. And these are just starting to scale. We also continue to enhance our customer experience and have launched new digital and self-service solutions, which have reduced the total volume and rates at which customers contact us. In full year 24, truck rolls and service calls each declined double digits by 11% year over year. Next, central to our success is our continued investment in our networks. I'm incredibly proud of our network and technology teams for their dedication to strengthening and expanding our networks, making significant strides in 24 to enhance connectivity across the communities we serve, and demonstrating unwavering commitment to recovery efforts in the wake of Hurricane Helene. In Hendersonville, North Carolina, and surrounding communities, our team worked tirelessly to restore service, provide free Wi-Fi in hard-hit locations, and support recovery efforts with donations to local relief organizations. These achievements reflect our commitment to keeping communities connected no matter the challenge. On network expansion, in full year 24, we grew our total footprint by over 2%, adding 210,000 passings. We closed the year with a total of 9.8 million total passings and achieved our target of 3 million fiber passings. We surpassed the milestone of 500,000 fiber customers ending the year with 538,000 fiber customers or over 18% penetration of our fiber network. Strengthening our networks has been a key priority of ours since I joined the company. And I'm pleased to share that our investments are paying off. Optimum fiber was recently ranked once again as having the fastest and most reliable internet speeds in New York and New Jersey. and now also rank the lowest latency and best gaming experience in New York, New Jersey, and Connecticut. This is in addition to awards we've received for both our fiber and HFC network superiority from other various third parties across the country. We've also made progress in optimizing our pricing and packaging strategy, growing our mobile base, improving video attachment rates, and launching value-added services, which are resulting in residential ARPU trends stabilizing. For context, in full year 22, residential ARPU declined by over 2%. In full year 23, we improved this to down 1.5%, and in full year 24, we improved this again to down 1%. with a strong reported full-year residential ARPU of 135.44. This figure is inclusive of customer credits related to Hurricane Helene and other one-time credits. Excluding these credits, full-year 24 residential ARPU would have declined less than 1%. Contributing to these trends, in Q4, our residential growth ARPU was higher by $4.50 year over year. through more disciplined and hyper-local pricing and growth in value-added services like mobile. And on broadband ARPU specifically, excluding the impact of product rack rate allocations and one-time credits, implied broadband ARPU would have been relatively flat in full year 24 and would have grown 1.2% year-over-year in Q4. highlighting our continued strength in maintaining broadband ARPU despite macro and competitive pressures our capital full year 24 cash capital of 1.4 billion dollars has stepped down by approximately 480 million dollars in the last two years and by 270 million dollars in the last year while continuing to fully deliver on our strategic growth objectives and last In full year 24, free cash flow grew by 23% year-over-year to $149 million despite the continued step-up in cash interest. On page five, we outline our 25 priorities as we enter the next phase of our transformation journey. These key priorities will help us to stabilize adjusted EBITDA, enhance capital efficiency, and increase free cash flow in 25. First, on revenue opportunity. We are committed to improving broadband subscriber trends by delivering exceptional value to our customers. In addition, we are focused on increasing value-added services, growing mobile penetration, and expanding our B2B product portfolio to unlock new revenue streams, improve ARPU trends, and enhance customer stickiness and loyalty. Our roadmap for value-added services in 25 includes launching whole-home Wi-Fi solutions with service protection add-ons, advanced Wi-Fi, including enhanced Internet security for businesses, and billing on behalf of partnerships with third-party OTT app providers and subscription services to sell in optimum packages. Our new pricing approach uses data analysis that balances rate and volume based on market conditions. Our approach to rate actions, base management, and acquisition pricing now enables us to better align with customer trends and drive top line improvements, which is expected to deliver up to an incremental $100 million in revenue in 25. Second, we are focused on driving efficiency across our operations. We will continue to leverage the power of AI, digital solutions, and self-service tools to drive further costs out of the system while continuing to improve the customer experience. By streamlining processes and enhancing product margins, we are positioning ourselves to operate more efficiently while delivering superior value to our customers. As an update to our Phase 2 transformational goals, we are completing enterprise benchmarking, and have identified efficiencies which are expected to moderate our other operating expense line by 4% to 6% by the end of 26. We will provide more detail on these plans in future calls. Third, we remain committed to strengthening our networks. We expect to continue to grow our total passings in 25, of which the majority is expected to be fiber-billed. and we plan to increase the availability of multi-gig speeds across our footprint by growing our fiber network, which offers eight gig symmetrical speeds and through upgrades to portions of our HFC network using mid-split technology to deliver up to two gig download speeds. We will continue to maximize the value of our fiber network by accelerating the pace of fiber migrations and penetration, which will allow us to realize benefits such as improved churn and lower cost to serve fiber customers. And last, we are focused on a sustainable capital structure in 25. We will continue to enhance our capital efficiency, targeting approximately $1.3 billion of capital in 25, while maintaining a strong liquidity position to execute on our operational and growth objectives. Let's turn to slide six to review our video strategy evolution in greater detail. In 25, we will continue to drive value by leveraging data, customer insights, and consumer research to make informed decisions that prioritize customer expectations while maximizing enterprise value. We kicked off 25 with actions that support that we are doing just that. By addressing programming partnerships to ensure we provide the best content and experiences to our customers based on what they want. And we know the content landscape has changed dramatically over the last few years. While video remains an integral part of our value-added services portfolio, playing a role in reducing churn and adding to overall residential ARPU, an important part of this strategy involves rationalizing our programming agreements to ensure we can deliver the content that customers value most at an affordable price. With that in mind, we have been navigating various programming renewals by putting the customer at the center of our discussions and making decisions based on viewing data and customer demand. By doing this, we have been able to thoughtfully mitigate disruption while ensuring we drive value, maintain competitiveness, and improve customer choice and value. As TV viewership has become increasingly fragmented across cable, streaming platforms, and other services, The nature of the video industry has been evolving, and so have we. That is why in late 24, we launched three new video offerings, Entertainment TV, Extra TV, and Everything TV, offering content that aligns with customer needs at compelling price points. Notably, these offerings integrate seamlessly with streaming services available on our Android-based platform, Optimum Streams. The launch of these new video offerings supported by enhancements to Optimum Stream, such as a new user interface, have resulted in improvements in our video attachment rate. Specifically, the rate at which new customers choose video at sign-up has been on the decline in recent years. However, in Q4, we saw this trend begin to inflect by over 200 basis points quarter over quarter. with approximately 20% of new customers in Q4 choosing to include video in their service bundle. And as we migrate customers to new video offerings and optimize our programming agreements, we have seen a consistent decline in our programming cost inflation per video subscriber, with full year video cost inflation per sub of approximately 4%, which has improved in the last two years from the average inflation of 6% to 8% in the years prior. We expect this trend to continue into 25. Over the last few months, we have engaged with thousands of customers who are embracing our new video products, packages, and options. These results reaffirm that our video strategy is delivering value for both our customers and our business. In summary, 24 was a year of remarkable transformation. We laid a solid foundation that positions us to continue to enhance our operations and deliver sustained value to our customers, communities, and stakeholders. I will now turn it over to Mark to review our performance in more detail.