Cable One, Inc.

Good afternoon, and thank you for attending today's Cable 1 fourth quarter and full year 2022 results call. My name is Jason, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star 1 on your cell phone keypad. I'd now like to pass the conference over to our host, Jordan Morkett.

Good afternoon and welcome to Cable 1's fourth quarter and full year 2022 earnings call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risk and uncertainties. You can find factors that could cause Cable 1's actual results to differ materially from the forward-looking statements discussed during today's call, in today's earnings release, and in our recent SEC filings. Cable 1 is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles, or GAP. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.CABLE1.net. During today's call, whenever we refer to fourth quarter results on an adjusted basis, we are excluding CABLE America, the operations contributed to Clearway Fiber, and the other operations we divested in 2022. And whenever we refer to full-year results on an adjusted basis, we are excluding Hargrave, Cable America, and the ClearWave operations we contributed to ClearWave Fiber. Joining me on today's call is our president and CEO, Julie Lawless, and Todd Cucci, our CFO. With that, let me turn the call over to Julie.

Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us for today's call. Our fourth quarter and full-year financial results reached new highs in revenues, adjusted EBITDA, and margins. We expect continued opportunities for growth, given that the long-term secular drivers of demand for digital connectivity are more present than ever before. It is our purpose-driven associates' relentless focus on delivering our strategy that ultimately enables us to compete and win. Our full-year results produced a 6.2% year-over-year increase in total revenues, an 8.6% year-over-year increase in adjusted EBITDA, and an 11.3% year-over-year increase in adjusted EBITDA plus capital expenditures. Our adjusted EBITDA margin improved 110 basis points year-over-year to 53.4%. For the fourth quarter, on an adjusted basis, Our total revenues increased by 1%, residential broadband revenue grew by 5.1%, and our business services revenue grew by 4.6%. On a consolidated basis, our Q4 adjusted EBITDA margin set another record at 54.8%, and our adjusted EBITDA less capital expenditures increased by 9.5%. Our sustained success is a result of our people, products, and disciplined investments. Looking ahead, we have every confidence in continued long-term growth as we execute against our ongoing strategy focused on connectivity and staying ahead of consumer trends. Looking first at our residential internet service, when excluding the operations we divested earlier this year, we added approximately 15,000 customers over the past 12 months. On a sequential quarterly basis, we saw a decrease of approximately 1,700 customers. As we shared during the third quarter, macroeconomic trends caused a slowdown in new home creation and move activity that resulted in a corresponding slowdown in Growth Connect. This trend, which continued in the fourth quarter, along with new competitors in select markets, adversely impacted our customer counts. We remain encouraged by retention of our base, with churn in the fourth quarter of 2022 in line with 2019 levels and data usage for our residential broadband services surging to new highs, translating to an increased sell-in and customer migration to higher tiered service offerings. As of the fourth quarter, more than half of the new customers selected speed tiers of 500 megs or higher, with one in three now selecting gig speeds. We implemented a $2 adjustment to our modem lease fees with our November billing cycles, our first equipment-based adjustment in five years. The increased sell-in coupled with the modem adjustment resulted in a 3% year-over-year growth in our residential broadband . As I will share a little later, we will continue to add more value to our internet service offerings, including our next generation Wi-Fi devices in a capital-efficient manner. Turning to competition, as of the end of the fourth quarter, only 35% of our markets had a wired competitor offering residential broadband download speeds of 100 megs or higher, which represents a relatively low percentage of our large geographically dispersed footprint. As our record high revenue, adjusted EBITDA, and margins in 2022 show, the economics of our business remains strong despite increasing competition. Our confidence in future growth is rooted in those things that differentiate us in our markets, local expertise, first mover advantages, and the continued evolution and enhancement of our products and customer experiences. Additionally, we have a capital efficient upgrade roadmap, which has been made possible by years of prior investment, while the cost for competitors to build new networks in the rural markets we serve is rapidly increasing. We continue to keep an eye on fixed wireless competitive activity. Our third party research indicates that the unlimited data plan offered by mobile service providers is available in less than 35% of our markets today. Mobile fixed wireless, though a low-cost option, has known reliability and capacity issues. This contrasts sharply with Cable 1's focus on being the premium internet service provider in the markets we serve. Our superior reliability and capacity have kept us insulated from this perceived threat Although we feel there could be a small portion of our historic wind share from lower-quality technologies like DSL trying out the mobile fixed wireless product, we're confident that these customers' continued demands and needs for higher speeds, increased capacity, and consistent reliability will ultimately drive future migration and adoption to fixed broadband solutions like we offer. Moving to business services, on an adjusted basis, we experienced strong revenue growth of 4.6%, quarter over quarter, and 6.2% year over year, with enterprise fiber growth accelerating meaningfully faster than these rates and significant addressable market opportunity still ahead. While we are seeing near-term pressure on new business creation caused by macroeconomic factors, our business services team continues to execute on the items within their span of control. That means an ongoing focus on high profitability customers, offering the broadband products they want, and providing the white glove service they expect, all while driving efficiencies further into the business. As I mentioned before, another constant in our business has been the demand for data which continues to reach new highs. Our average data usage has grown at a CAGR of 26% over the past five years to nearly 640 gigabits per month in the fourth quarter of 2022, with downstream usage 15 times higher than upstream. By making balanced capital investments over that same period, we ensured that capacity was never a barrier to growth. As of the fourth quarter of 2022, Downstream and upstream utilization during peak hours never exceeded 23%. As our network evolves with our next-gen DOCSIS 4.0 roadmap, we will preserve our core principles, staying well ahead of the demand curve with balanced upgrade investments that are meaningfully less than our competitors. In the fourth quarter, we continue to execute against our integration roadmap with the launch of an advanced customer contact center platform across Fidelity markets. With a sharpened focus on transforming our business, we were pleased to see enhanced performance in all key contact center metrics, including time to answer, service levels, and associate productivity. We're very grateful to our Fidelity associates for leading the way with this implementation. which we will ultimately roll out across the MSO, retiring more than a dozen separate software platforms in the process. 2023, we'll see our next generation Wi-Fi platform arriving in our customers' homes. This new product will provide us with greater insight into internet health within the home, enabling proactive maintenance critical to reliability and customer satisfaction. We understand that our customers do not differentiate between wired and wireless performance in their home, so we continue to invest and roll out devices that provide seamless reliability, no matter how customers choose to connect to our service. Looking at our unconsolidated investments, in total, residential and business data customers grew by approximately 13,200, or 3%, on a sequential basis in the fourth quarter and more than 43,900 customers for the full year 2022. This does not include the operations of Metronet or Ziply where we have less significant investments. The continued growth of these businesses compounds for a long-term consistent strategy of aligning with proven management teams and the most reputable financial partners in this sector. Before handing the call over to Todd, I'd like to mention a few other notable events from the quarter. I'm pleased to share that Ken Johnson was promoted from SVP Technology Services to Chief Technology and Digital Officer. In this role, Ken will lead our enterprise-wide digital evolution while retaining oversight of the company's technology roadmap. Ken's visionary thinking, combined with his business acumen, Knowledge of Cable 1 and digital expertise will help continue to drive digital transformation throughout all areas of the company. I'm also proud to note that Cable 1 was recently named by the WICT Network as one of 2022's top companies for women to work. This is based on the results of their most recent workplace diversity survey. We are honored by this recognition, which is a direct reflection of our commitment to cultivating an inclusive and diverse workplace that is purpose driven and engaging, enabling all of our associates to thrive. As of year end 2022, women represented 33% of Cable 1's total associates, 36% of management level positions, and 60% of our 10 member board. And now Todd, who will provide a full recap of our fourth quarter financial performance.