Cable One, Inc.

Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainties, including statements regarding future broadband revenue, customer growth, connects and churn rates, new product rollouts, anticipated cost savings and other benefits to be derived from our billing system migration and our other investments in growth enablement platforms, anticipated benefits from our mobile service pilot program, future cash flow, ARPU and capital expenditures, future levels of competition, potential stock buybacks, our ability and sources of capital to fund the retirement of our 0% convertible notes in 2026, the estimated MBI put call purchase price, MBI's future debt levels, the anticipated after-tax proceeds from the expected monetization of certain investments, expected cash tax savings to be realized as a result of the recently passed federal tax bill, our CEO succession process and our future financial performance, capital allocation policy, leverage ratios and financing plans. 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 and today's earnings release and our SEC filings, including our annual report on Form 10K and our forthcoming second quarter 2025 quarterly report on Form 10Q. Cable 1 is under no obligation and expressly disclaims any obligation except is 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 With U.S. generally accepted accounting principles or GAP. When we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliation of non-GAP financial measures discussed on this call to the most directly comparable GAP measures can be found in our earnings release or on our website at .Cable1.net. 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. This quarter's results were influenced by a combination of internal actions we took during the period as well as a few external factors. These included some pricing and packaging adjustments for a subset of our customers, double the typical volume of promotional roll-offs, continued competitive headwinds, and seasonal softness in our college markets. Against that backdrop, residential broadband revenue increased on a sequential basis by 1.9 percent compared to the first quarter, driven primarily by higher ARPU. Business data revenue was $57.4 million and Consolid Adjusted EBITDA was $203.2 million, both results consistent with Q1 levels. Despite the residential broadband customer losses we experienced in the quarter, we're encouraged by the sequential improvement in connects throughout the first half of the year, with continued -over-month growth in June, representing the first month during 2025 with a -over-year increase in connects. We believe our drive towards simplified pricing, segmented marketing campaigns, and value enhancing product and service offerings is laying the groundwork for stronger subscriber uptake and improved operating performance over time. In addition, the completion of the final phase of our billing conversion marks a key milestone in multi-year investment in growth enablement platforms, positioning us for more agile product launches and deeper customer engagement going forward. I'll first review residential broadband customer trends. Residential data customers declined by 13,000 in Q2, driven by continued softness in connects and elevated turn. However, as I just noted, we have seen sequential month over month growth in connects every month this year through the end of Q2. This trend suggests our new products and -to-market strategies are showing early signs of positive impact. Elevated disconnects this quarter were driven by customer response to recent segmented pricing changes, turn arising from promotional roll-offs, and seasonal turn in our college markets. Completing the final phase of our AutoPay Plus rollout also resulted in some incremental turn. But AutoPay Plus, which includes a $5 surcharge for non-enrolled customers, has been a positive program for us by either increasing our POOP or reducing billing costs and improving retention over time. Broadband revenue increased on a sequential -over-quarter basis, driven by a $2.39 increase in our POOP. This was due to the impact of segmented pricing changes, as well as promotional explorations, greater adoption of value enhancing services like Secure Plus and Ultimate Wi-Fi, and as I noted above, the completion of the rollout of our AutoPay program. Selling to premium speed tiers of gig or above remained high at 46%, reinforcing customer demand for higher speed plans and further supporting our POOP. Looking ahead, we expect our POOP to remain stable for the remainder of the year. We're seeing early traction with Lyft Internet, which is helping us reach value conscious customers in a financially sustainable way. FlexConnect adoption has not met our expectations to date, but we continue to believe that both FlexConnect and Lyft will play an important role in today's competitive environment. These products compete directly on price with cell phone internet, while offering a superior experience with unlimited data, consistent speeds, and greater reliability. Key differentiators, given that our customer average data usage is now nearly 800 gigabytes per month, and over 27% of our customers regularly surpass a terabyte of data. To further elevate our customers connected home experience, we recently launched TechAssist, a $10 per month support service that offers expert with a wide range of Wi-Fi connected devices outside of our internet equipment. From setup to troubleshooting and ongoing support, TechAssist provides customers with convenient, reliable assistance for tech issues related to smart thermostats, doorbells, security cameras, and more. While we don't expect TechAssist to generate material revenue in 2025, it reflects our focus on delivering customer-centric innovation and practical value-added services that simplify daily life for our customers. We are optimistic it will begin to generate meaningful results in 2026 and beyond. Turning to competitive dynamics, Fiber to the Home overbuilds, largely from incumbent teleco providers, now represent approximately 53% of our passings. In addition, cell phone internet competition is nearly ubiquitous across our footprint. While we expect competitive intensity to persist, we believe our neighborly service, enhanced platforms, and evolving set of products position us to defend and grow share over the long term. We're continuing to fight hard for every new customer while staying focused on retaining our existing ones. While we're seeing some encouraging signs, steady -over-month growth and connects during the first half of the year, stable ARPU, and early momentum from new products, given the customer losses we experienced in the second quarter, we do not expect to grow total residential broadband customers in 2025. In addition, we currently expect total residential broadband revenue for 2025 will be flat or decrease modestly for the full year as compared to 2024. We remain focused on driving innovation that simplifies the customer experience and enhances operational efficiency. One example is AskTommy, our AI-powered assistant that not only handles tasks typically managed by our field techs, like contacting customers with appointment windows and rescheduling when necessary, but also provides techs with AI-driven technical expertise to help diagnose and resolve issues more quickly. This tool reflects the kind of everyday workflows we're beginning to automate, allowing us to better allocate resources and dedicate our highly trained technicians to more complex service needs. This is just one example of how we're using AI in practical, impactful ways. Earlier this month, we executed the final phase of our billing system migration, transitioning Hargrey and Legacy Sparklight customers onto our unified platform. This initiative consolidated more than 30 legacy programs, enabling all acquired companies to operate under the Sparklight brand. This project was central to our ongoing transformation. Being on a unified platform will significantly enhance the customer experience by streamlining our rate structures across markets, enabling more flexible pricing, and allowing us to respond more quickly to competitive changes. It also delivers a faster, more intuitive interface for our customers. While this represents a significant step forward, there are a number of post-migration workstreams to be completed before we fully realize the benefits of this transformation. We expect the billing migration will result in several million dollars in annual cost savings, starting in late 2025, as we further leverage the system for pricing, product, and service innovation. We're excited to share that we've signed an agreement with a mobile virtual network enabler, or MVNE, to pilot mobile service in several of our markets. This marks the start of a focused initiative to explore whether mobile can complement our wired broadband product by delivering added convenience, greater flexibility, and stronger overall value for customers. By offering connectivity both inside and outside the home, we aim to strengthen long-term relationships and improve retention while meeting more of our customers' everyday needs. Our belief has been that mobile makes sense only if a few key conditions are met. Improved wholesale economics, better mobile network reliability standards in our markets, mature enablement platforms, and a fully featured product with the potential to attract value-conscious customers. The shifting market dynamics and advancements in technology have improved the economic viability of mobile, making this a good time for us to launch this pilot program. Mobile has the potential to enhance customer lifetime value, reduce churn, and support packaging opportunities that reinforce the strength of our core broadband business. We'll take a disciplined approach on this new initiative and see what we learn as the pilot progresses. To wrap up, while competition is fierce and there's a lot more work to do, we believe we are taking the right strategic actions to grow the business over long-term. We're seeing better sequential monthly trends and customer ad activity over the first half of the year, early momentum from some of our new product lines, and we anticipate greater efficiencies and improved customer experience from our unified billing platform going forward. Most importantly, we believe we are building a growth engine thoughtfully and recognize that continued transformation will be required to fully realize our long-term ambitions. And now, Todd, who will provide a recap of our second quarter financial performance.

Thanks, Julie. Total revenues for the second quarter of 2025 were $381.1 million compared to $394.5 million in the second quarter of 2024. Residential video revenues drove the majority of the decrease in total revenues with a -over-year reduction of $9 million, or 15.8%, due to continued video subscriber attrition. Residential data revenues decreased $1.1 million, or .5% -over-year, driven by a .2% decline in subscribers, partially offset by a .4% increase in ARPU. However, on a sequential basis, residential data revenues increased $4.2 million, or .9% over the first quarter, driven by a 3% increase in ARPU. Business services data revenues grew .2% -over-year in Q2 2025, driven by continued strength in our high-value fiber and carrier segments. These high-performing categories benefited from robust sales activity, increased connection volumes, and the ramp of previously announced multi-million dollar long-term contracts. On a sequential basis, business data revenues increased 0.2%. Operating expenses were $102.4 million, or .9% of revenues in the second quarter of 2025, compared to $105.8 million, or .8% of revenues in the prior year quarter. With the decrease driven largely by a reduction in programming costs. Selling, general, and administrative expenses were $92 million for the second quarter of 2025, compared to $90.8 million in the prior year quarter. SG&A as a percentage of revenue was .1% for Q2 2025, compared to 23% of revenue in the previous quarter of 2025. With the increase driven largely by investments in growth enablement platforms, partially offset by a reduction in labor costs. Taken together, these platforms and ongoing operating efficiencies are expected to generate annual run rate cost savings of approximately $15 million across both operating and SG&A expense, including the anticipated savings from our billing system migration. While some of these savings may be offset by inflationary cost pressures or reinvestment in growth initiatives, we expect a meaningful net benefit over time. During the quarter, triggered by a decline in the price of our common stock, we conducted impairment assessments of our intangible assets and goodwill and recognized a combined non-cash impairment charge of $586 million. This charge doesn't impact our cash flows, operational strategy, or growth initiatives. Adjusted EBITDA of $203.2 million was .3% of revenues in Q2 2025. In Q2 2024, adjusted EBITDA was $212.4 million, or .8% of revenues. Capital expenditures were $68.4 million in Q2, a decrease of $3.2 million, or .5% year over year. During the quarter, we invested $8.7 million of CapEx for new market expansion projects and $2.2 million for integration activities. Adjusted EBITDA of capital expenditures, or free cash flow, was $134.8 million in the second quarter of 2025, representing .4% of adjusted EBITDA, compared to $140.8 million and .3% in the prior year. We will continue to evaluate how best to deploy the meaningful free cash flow generated by our business with a steady focus on long-term growth and disciplined conservative balance sheet management. With the passage of the tax bill earlier this month, we expect to realize approximately $40 million of cash tax savings in 2025 and approximately $120 million of aggregate cash tax savings through 2027, based on our preliminary estimates and available information. We used a portion of our substantial free cash flow, in addition to cash savings from dividend suspension, to pay down over $70 million of debt during the quarter. On top of nearly $5 million of scheduled term loan amortization payments, we voluntarily paid down $45 million of revolver borrowings and opportunistically repurchased over $21 million of senior notes and term loan borrowings at attractive discounts to face value. This brings our gross debt repayment during the last two years to well over a half a billion dollars, excluding the $175 million revolver draw related to the amendment to our MBI strategic partnership late last year. In addition, we repaid another $25 million of revolver borrowings earlier today. In addition to disciplined debt repayment and deleveraging, we may opportunistically and prudently buy back shares under our remaining $143 million authorization, dependent on the trading level of our common stock, market conditions, and other factors. As of June 30th, we had approximately $153 million of cash and cash equivalents on hand, and our total debt balance was approximately $3.5 billion, consisting of approximately $1.7 billion in term loans, $920 million in convertible notes, $633 million in unsecured notes, $228 million of revolver borrowings, and $3 million of finance lease liabilities. We ended the quarter with substantial committed liquidity available under our $1.25 billion revolving credit facility, providing meaningful financial flexibility. Our weighted average cost of debt the second quarter of 2025 was 3.9 percent, and our net leverage ratio on a last quarter annualized basis was 4.1 times. Nearly $2.8 billion of our $3.5 billion of debt contains fixed or synthetically fixed base interest rates that are substantially below current market rates. Between our free cash flow generation and the substantial available capacity under our revolving credit facility, we expect we will be able to fully retire our 2026 convertible maturities without needing to arrange for additional financing. Even so, we will continue to monitor the capital markets in order to be in a position to take advantage of attractive opportunities should they arise. Turning to MBI, now that the June 30th measurement period has concluded, we've narrowed our estimated range for the purchase price if the call or put option is exercised. We now expect the purchase price to fall between $460 and $510 million, and the amount of MBI's total metandetanus at the time it is acquired will be between $845 and $895 million. If the put option is exercised, we would anticipate the closing to occur on October 1, 2026. Over the last two years, we've completed or announced the monetization of five equity investments, and we expect to continue to evaluate strategic options for our remaining equity investments. Earlier this month, we monetized our stake in Metronet, and our monetization of Ziply remains on track to close before the end of 2025. Together, these transactions are expected to generate in excess of $100 million of combined after-tax proceeds supplemented by the MBI funding, and we expect to continue to implement our discretionary cash and excess liquidity position. Before we open it up for questions, I want to reiterate that although we operate in a competitive environment, we are confident that our strategy will result in long-term, sustainable growth. Between positive monthly connect activity trends during the first half of the year, our new value-focused product offerings, the rollout of segmented marketing campaigns, and expected efficiencies from our investments in strategic growth enablement platforms, we believe we are making progress towards our goal of growing our business over the long term. With that, I'll turn the call back over to Julie before we move into Q&A.

Thanks Todd. Before we open it up for questions, I want to briefly touch on the CEO succession plan we announced in the second quarter. After 26 years with Cable One and more than 40 years in the industry, I will be retiring later this year upon the earlier of the appointment of my successor or year end. I will continue to serve as CEO until my retirement. I will remain as a senior advisor through 2026 to support a smooth transition. The board has retained a leading executive search firm and is conducting a comprehensive search process for my successor that includes both internal and external candidates. This process is designed to ensure a stable transition and execution of our long-term growth strategy. With that, we're ready for your questions.

At this time, if you would like to ask a question, please press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Brandon Nispel with KeyBank. You may go ahead.

Hey guys, thanks for taking the questions. Julia, you mentioned that competitive overlap with fiber now stood at 53%. I think that's up quite a bit from the last disclosure. I was hoping you could talk a little bit about the net ads or losses that you're seeing in fiber versus non-fiber markets. Trying to understand if there's a difference or if some of the competitive losses are just sort of going to fix wireless. Thanks.

Sure, Brandon. Thanks. Actually, last quarter we said that our overlap with fiber was 50%. We went from 50% to 53% during the course of the quarter. In terms of fiber versus non-fiber, we don't really see... Fiber is broken down into the big guys who are moving relatively slowly and then some smaller folks who are making some incursions into small parts of small markets. So based on competitive intelligence that we have, our losses are coming from a lack of connects that are likely being taken by cell phone internet. During the quarter, we had connects that were higher each month during the year. In June, represented a year over year month where connects were actually higher in 25 than 24. So we feel relatively good that we're making progress there, albeit not as high as we would like to see. We also had elevated churn. And I think going through examples will help illustrate how the activities that we talked about in the script, those internal actions that we mentioned, they affected both ARPU and churn. I'll give you some examples to illustrate. We did do some pricing changes for a subset of customers. As we've talked about actually quite a bit in the past, we take a targeted approach there where some customers rates are going down, some customers rates are going up. We also have had pricing normalization as we've gone through our billing migration and harmonized all the brands into Sparklight. We had the roll off of promotional discounts and this quarter promotional discounts were roughly double of our typical volume. And what happens when we do the promos is we get a higher response rate. So that's good. We're bringing more customers in the door. But there will be some attrition when they roll to higher rates. Now this cohort actually retained incredibly well, actually higher than our base. And we're going to keep an eye on them to see how they continue to retain. But you can see where those promo roll offs would have created churn and a bump in ARPU. We also have seen broader adoption of our value added services like Secure Plus and Ultimate Wi-Fi. And our Gig Plus plans are continuing to sell in at 46%. So that's helping on the ARPU side. And then the last thing that affected churn, but also ARPU, is the completion of our final phase of our auto pay program. And so we had the remaining quarter of our customers who had not been exposed to that because they were in our family of brands. And what happens when we roll this out is we see the highest non-enrollment rate. That means they are being charged that $5 surcharge. But over time, people adopt into the auto pay program. And so thus their monthly rate will be coming down. So I hope that helps to explain.

Yeah, it's a great color. I was hoping maybe then as a follow up, you could help us understand what promo roll off looks like going forward. And given that you saw higher churn from promo roll off, are you implementing any sort of unique save tactics that might help churn and save those customers? Thanks.

Great, great questions. Yes. So these are promos that were affected in 2024. And through the remainder of the year, we expect this dynamic to remain elevated. And we do have actually, when I've talked about the team in the past, I've talked about folks that we have brought on board who come from highly competitive environments or even entrepreneurial environments. And the person who is in charge of our retention tactics is hard at work. And again, at this point in time, Brandon, this cohort is retaining at a higher level at its point in time in its life cycle than our base. So it sort of suggests that it's a right size value for them, I would say.

Appreciate you taking the question. Thank you.

Your next question comes from the line of Sam McHugh with BNP Paribas. You may go ahead.

Awesome. Thank you very much. First on broadband, obviously we've seen an acceleration in losses again, but then the ARPY is strong. It seems like you're still struggling to balance the two. You talked about flex connect not quite meeting expectations. So when we think about this, what's your priority? Is it subscribers or is it ARPY? Which is the number one priority? Secondly, you talked about ARPY being stable. Just to clarify, are you talking about year over year now or sequentially from 2Q? Thank you very much.

Hi. Thanks, Sam. When it comes to our priority, it is in fact a truism that we are attempting to balance both. But again, there are puts and takes in each one of our markets. It's one of the positives of having systems in 24 states that have different dynamics going on at a time. So again, there's increases in some markets, there's decreases in others, or maybe there's different tests going on with all-in pricing, that sort of thing. When we're talking about ARPY being steady, we're saying from this point forward through the rest of the year, we assume that ARPY will be stable. For color on flex connect, I'll turn it over to Todd.

Yeah. Sam, on the stability side, as Julie just said, we've been really close to the mean now for the last four quarters. So quarter to quarter ARPY with some of the promotional dynamics, with some of the segment and rate adjustments that we've made is going to have some change. But when we talk about stability, we obviously look at that, as you've heard us say before, through the lens of a longer term period than the next quarter. But as Julie said, for the rest of the year, we expect ARPY to remain stable. We don't anticipate large fluctuations, but rather steady performance. As it relates to flex, it didn't meet our expectations in terms of additional connects, additional gross ads for the quarter. As you recall, we were launching that later in the quarter at the same time, we were prioritizing the best execution that we needed to complete the migration of our billing system, as well as the revamp of our website and our digital ecosystem. We basically identified that getting those two core platform implementations complete was going to give us a foundation for launching that product. So we're actively right now refining the go to market on the back end of those two critical implementations and readying a relaunch of that, which will occur in Q3. We'll put increased marketing behind that, increased branding support behind that. And we still expect that flex connect will be an important lever in our broader segmentation strategy for new customer acquisition, specifically with that value conscious customer base.

If I can ask a small follow up as well. AT&T has been talking about accelerating with internet air in the second half of this year. I know in your markets, whether you've seen a noticeable change from how they go to market on copper saves.

Yeah, it is a good question. And it is a relevant one. We've talked about that really for the last couple quarters, because in some of the smaller markets specifically, where AT&T has not upgraded their copper network to fiber, they have been very aggressive with that product, whether that's a save or an interim strategy. You'll be better to analyze that. But that is a product that we believe a solution like flex connect can go head to head with in those environments. Their upgrades have slowed. But counter to that, their pressure on that fixed wireless cell phone internet product have accelerated.

Super. Thanks, Bob.

Your next question comes from the line of Sebastian Petey with JP Morgan. You may go ahead.

Thanks for taking the question. It's great to hear the pilot for mobile. You guys mentioned that the economic viability of the offering has improved, and that's kind of the driving factor. But I'm also curious if you would characterize the strategy as a competitive response in any way. It seems like all the big tocos are increasingly pushing convergence, so I'm wondering if you guys kind of see that at a go to market level. And then secondly on mobile as well, I mean, any initial thoughts around go to market? Would we expect something like free lines, for example, like some of your cable peers do? Thanks.

Thanks, Bustiano. It's Julie. It isn't just the improving economics. It is also the stability of the mobile networks in all of our markets, which we had an issue with here before, as well as getting a fully rounded product. That is to say that it was fully featured in that the enablement platform was tried and true. So all of those factors are coming into play now, making us feel comfortable that this is something that would be in alignment with the Spark light brand image. It would not cause it any harm. When it comes to convergence and what we think this can do, we see it as adding a piece of, well, an ease of life to our customers, quite honestly, and having a product that meets their needs and hopefully helps with our main product, which is broadband. So by bundling the two together, we of course are hoping that it is a value to our customers and helps our broadband service as well as offers us an opportunity for enhanced profitability. I think that's the lens through which we see convergence is through the lens of profitability. In terms of go to market, what I can tell you is that we expect to be live before customers in our pilot markets by the end of the year. And you can imagine that we will be testing many, many different things to learn as we go.

Great. Thanks, Julie.

Your final question comes from the line of Frank Luzon with Raymond James.

Great. Thank you. Great. Thank you. On the billing system conversion, when will that have finished going through its first full billing cycle? And are you confident at this point that you're not dropping customers or it's going to have any other issues like you had earlier this year?

Thanks. Hi, Frank. It's Julie. I don't think that we've had any problems with our first phase of our billing migration, nor the second. We've gone through a complete cycle, meaning all four cycles of phase two. And so no problems with billing customers, with reporting, with provisioning. We do have follow-ups because almost everything flows from that. So every piece of provisioning, we will be downturning multiple different billing systems, different provisioning systems. We'll be going from five web sites to one. There's still work to be done, but the billing migration is done. And while very, very tough, it is going well.

All right. Great. Thank you.

This concludes the question and answer session. I would now like to turn the call back over to Julie Lawless for closing remarks.

Thank you, Lacey. This is a dynamic time for our industry, and I am proud of how our associates continue to step up, execute with discipline, and stay focused on providing great experience for our customers. I remain grateful to and thankful for them and all their hard work. Thanks again for your time and interest in Cable One.

That concludes today's call. You may disconnect.