Cable One, Inc.

Businesses across our footprint gave Sparklight top marks in overall satisfaction, cost, reliability, and support, to name a few. These awards would not have been possible without the tireless efforts of our associates, who remain dedicated to supporting our customers and our community. In keeping with our commitment to supporting our communities, not only through our products and services, but through philanthropic initiatives and partnerships, We are pleased to share that we recently awarded more than $100,000 in grants to 30 nonprofit organizations across our 24-state footprint through the company's Charitable Giving Fund, which was launched in January 2021. The Charitable Giving Fund, which will annually award $200,000 in grants to local nonprofit organizations in our markets, concentrates support in the areas of education and digital literacy, hunger relief, and community development. Finally, I'd like to welcome Todd Cucci, who will join the company as Senior Vice President of Business Development and Finance in September. Todd comes to us from Truist Securities, where he most recently served as Managing Director of Technology, Media, and Telecommunications Leverage Finance Team. He brings more than 20 years of relevant capital markets, telecom industry, and financial leadership experience, making him a valuable addition to the Cable One leadership team. And now, Steven.

Thanks, Julie. The second quarter of 2021 generated exceptional financial results. Revenues for the second quarter were $401.7 million compared to $328.3 million in the prior year quarter, a 22.4% increase. This increase, which included $50.6 million of revenues from Hargrave operations, was fueled by a residential HSD revenue increase of 26.6% and a business services revenue increase of 31%. When we exclude second quarter 2021 Hargrave results, we would have seen second quarter total revenue increase by 7%, residential HSD revenues increase by 15.7%, and business service revenue increase by 5.6%. Residential HSD customers grew by approximately 165,000 or 21.7% year-over-year. Approximately 110,000 residential data PSUs came to Cable 1 in the Hargrave acquisition, of which approximately 19,000 were contributed to Hargrave in the Anniston Exchange in October 2020. Excluding Hargrave customers, we added over 12,000 residential HSD customers on a sequential basis. Operating expenses were $112.4 million or 28% of revenues in the second quarter compared to $106 million or 32.3% of revenues in the prior year quarter. A 430 basis point improvement driven largely by a decrease in programming and compensation expenses. Selling general and administrative expenses were $88 million for the second quarter of 2021 compared to $65 million in the prior year quarter. These expenses were 21.9% of revenues in the second quarter of 2021 compared to 19.8% of revenues in the prior year quarter. Net income in the second quarter was $106.2 million. Net income included a $33.4 million non-cash gain on fair value adjustments associated with the company's existing investment in hard gray, partially offset by a $21.4 million non-cash loss on fair value adjustments associated with the call and put options to acquire the remaining equity interest in mega broadband investments. As a reminder, the MBI options are subject to mark-to-market accounting on a quarterly basis. Until these options are exercised or expire, any changes in the assumption used to determine their fair values could increase or decrease the resulting valuation, which in turn could cause significant non-operating fluctuations in our GAAP financial results from one quarter to the next. Net income per share on a fully diluted basis was $16.68 per share, inclusive of the non-cash gains and losses just mentioned. Adjusted EBITDA was $213.2 million for the second quarter and increased 30.7% from the prior year quarter. For reference, Hargrave's two months of operating results contributed $22.3 million of adjusted EBITDA this quarter. Our adjusted EBITDA margin increased 340 basis points year-over-year, going from 49.7% to 53.1%. Capital expenditures totaled $89.3 million for the second quarter of 2021, which equates to 41.9% of adjusted EBITDA. During the quarter, we invested $19.4 million of CapEx for network expansion and $2.4 million for integration activities. bringing our totals for the years to $26.5 million and $6.4 million, respectively. Adjusted EBITDA left capital expenditures was $123.9 million for the second quarter and increased 46.6% from the prior year quarter. In the second quarter of 2021, we paid $15.1 million in dividends to shareholders. On May 3rd, 2021, we closed our purchase of the remaining approximately 85% equity interest in Hargrave that we didn't already own. The transaction implied a $2.2 billion total enterprise value for 100% of Hargrave on a cash-free, debt-free basis. Additionally, on May 3, 2021, to partially finance the Hargrave acquisition, we obtained an $800 million term loan, which matures in 2028. The net proceeds of the offering were $789.8 million after deducting issuance costs. From a liquidity standpoint, we had $449 million of cash and cash equivalents on hand as of June 30th, and we continue to generate significant free cash flow. At quarter end, our debt balance was approximately $3.9 billion, consisting of approximately $2.3 billion in term loans, $920 million in convertible notes, and $650 million in unsecured notes, and $5.6 million of finance lease liabilities. We also had $459 million available for additional borrowings under our revolver as of June 30th. Overall, our debt to last quarter annualized adjusted EBITDA after netting cash on hand against debt was at 4.1 times as of June 30th. Cole, we are now ready for questions.

Thank you. And we will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. And at this time, we'll pause momentarily to assemble the roster. Our first question today will come from Phil Cusick with J.P. Morgan. Please go ahead.