Q1 2020 Earnings Call
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Good afternoon, and welcome to cable ones first quarter 2020 earnings call. We appreciate you joining us today.
We proceed I would like to remind you that today's discussion may contain forward looking statements relating to future events and expectations.
You can find factors that could cause <unk> actual results to differ materially from these projections listed in today's earnings release.
Our recent filings.
Cable one is under no obligation and expressly disclaims any obligation except as required by law to update or alter its forward looking statements, but there was a result of new information future events.
Additionally, today's remarks will include a discussion of certain financial measures that are not presented and conformity with U.S. generally accepted accounting principles reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release, we're on our website at <unk> IR cable one talking yet.
Joining me on today's call is our president and CEO, Julie Lawless with that let me turn call over to Julie.
[music]. Thank you Peter.
Good afternoon, and I want to think Oh.
Shareholders analysts and bankers shore, taking time to join us during these unprecedented times.
I wrote off by mentioning our Sofia.
I am proud and humbled by the opportunity to work side by side with them each and everyday.
Well its cannot express my gratitude for all they have done during these turbulent time.
Our associates.
Higher legislature server communities throughout the curve at 19 pandemic.
Once again.
Sure and commitment they have shown for our customers intercompany first simply remarkable.
On the outside of this crisis, our primary focus that's going on the health and safety of our associates and their families.
We've instituted in multiple initiatives to ensure our associates are kicking Carol so that they in turn can continue to take care of our customers.
As part of our pandemic freed.
Risk associates, and those who needed to work remotely to care for their children were able to work from home almost immediately quickly followed by more than 90% of our corporate and call Center associates.
For those enroll it's critical to continued operations.
Able to perform their jobs from how we implemented rigorous news safety protocols and procedures based on national and local guidelines.
In addition, we implemented purpose.
A 25% premium too early base pay for sets you sure to leave their homes.
Part of our companies.
[music] to reduce financial uncertainty cheaper our associates and allows flexibility and caring for their families. During the stressful time, we enhanced our time off program.
Got included providing up to 80 hours of additional emergency paid time off first that's yet to care for themselves for their family members.
For associates and need more time, our enhanced emergency family leave provided an additional 10 weeks job protected leave two thirds regular price.
[music] Ur Cobot 19 response is being led by a cross functional incident management team that began proactively planning in February for the challenge as we would face.
Since that time. This team has worked around the clock to address the unique situations and conditions impacting or 2700, plus associates and more than 950 communities served across 21 state.
In addition to daily briefings and communication to ensure our associates were kept well informed this team within constant contact with our leadership team, enabling the sharing of key information necessary to make important decisions in a rapidly changing environment.
They also devoted enormous efforts to ensure we had adequate supply chain for customer equipment as well as personal protective equipment and work from home supplies for our says to you.
It's communication efforts.
I'm going.
Our commitment to keep our customers connector to what matters. Most has never been stronger them through this crisis. When we put in place several measures to stay true to that.
The healthy financial burden numbers impacted by this pandemic and to provide continued connectivity for our customers and communities. We initially made the following 60 day come up.
On March 13th that's part of the FTC keep Americans connect a pledge, which we recently extended to June Thirtyth 2020.
We are waiting late fees to spending disconnection of Internet services.
Residential and small business customers, who are unable to pay their bills due to disruptions caused by the pandemic.
We understand how important connectivity is.
Finally during this time.
To do work hard to keep our customers connected to loved ones as well as work in school activities, while they remain at home.
We have opened up more than 140 free Wi Fi hotspot and local office parking lot and other public areas across our footprint for public is during the crisis.
Work continues to open additional Wi Fi hotspot another public areas.
In addition to those initiatives, we implemented a variety of enhanced measures beyond the pledge.
Among those efforts, we suspended charging data overachieved beginning on March 19th Jeez customer concerns they began to use more data than normal and not change was extended through June 22nd 2020.
Given recent usage patterns, we're also evaluating our existing data plans.
Okay adjustments, when we were Sam or standard service.
We are also offering a low cost 15 like residential internal plan for $10 per month through June 30 up 2020 to help low income families and those impacted from covert 19 challenge is such a senior citizens in college students.
Additionally, we partnered with local school districts across our footprint to provide internet service per student some families unable to afford it on their own through June 30 up to 2020.
School districts accepted direct billing and determined eligible households for the service, which enable students to finish out the school year.
In an effort to ensure vulnerable senior systems in both the greatest risk receive a nourishment they need during this candidate we don't need it to $150000 to the meals on wheels covered 19 responses on a $150000 to local food banks across the 21 states we serve.
And finally, the possibly I'm, most impactful outskirts efforts, where the individual initiatives of our associates and our systems her taking it upon themselves to support their local communities.
A few examples include during any funds to help pay for extended childcare and providing meals for healthcare workers and first responders delivering books and material 15 year centers, that's surprising customers with local restaurant gift card.
These efforts truly speak to the commitment of our associates, but they have to their communities and how we all can come together to help each other and trying to crisis.
And you always have to start the top of the call, but it does bear repeating I cannot say enough how proud I am of our cable one team and how we have taken care of each other or customers in our community over these last few months.
Before discussing our operations I think it is worth noting that many of these efforts are a reflection of our purpose, which tried to every day.
To provide community connectivity that enriches bear world.
Simply put we are remaining true to we are and I'm confident that by staying the course, well not only weather the storm, but come out stronger.
I'm very grateful to be in the broadband industry at a time when we can make an impactful difference for so many by providing an essential services are critical infrastructure.
We laid the foundation Luckily seven years ago, but our strategic shift to prioritize residential HSD and business services and de emphasize video.
Today that <unk> continues to pay dividends as our infrastructure husband engineer to support the speed of volume of data needed. During this time for residents and picking businesses.
[laughter].
We're also very fortunate to operate in less dense geographically disbursed markets.
Experienced much more limited help impacts on this virus so far.
We were off to a great starch 2020 prior to the Kogan My team pandemic, if each month during the first quarter, so larger HST and the thing month last year.
As a crisis unfolded. However, the more people began working schooling and getting out only entertainment compound demand for a reliable high speed data connections increased significantly.
We experienced and I think uptick in residential HSD sales during the last two weeks of March that has busbar continued into the second quarter.
In the first quarter, we added more than 18000 residential HSD customers, excluding fidelity or year over year growth rate was 4.2% and in the second quarter. We have already added more residential HSD customers in the first month, then we get throughout the entire first quarter.
Well, let's take a moment bank our technicians not only manage to complete an increased number of installations. During this challenging time.
Innovative ways to take care or customers as well.
That's one example, because our technicians were no longer entering home to complete installs for their health and safety and out of our customers. Our team created a video chat app that allowed her technicians Walker customer through completion of the installation from outside the home.
Data usage also dramatically increase for a quarter with average consumption per customer increasing more than 34% versus the prior year nearly 12% from the first fourth quarter 2018 to slightly less than 390 gigabits per month.
We're pleased to share there are not work is weathering fees increased amounts without strain.
Throughout the quarter during peak usage or network utilization average less than 30% for downstream tropic unless them, 20% for upstream traffic over the past three years, we invested more than $600 million to stay well ahead of the consumption curb and bring fast and reliable internet to rural communities across DARPA.
Correct.
The return on that investment for the benefit of our customers a community is readily apparent and allows us to strengthen our capability to grow and compete into the foreseeable future.
In addition to the increased demand for our core product. We have also seen an acceleration in the adoption of self installations online video chat self service web orders and reduced travel with increased adoption of Telework. The benefits. These digital transformations are not only realized on lower operating cost but.
Increasing customer satisfaction scores.
Expect some or all of these ships may persist one impacts from the pandemic subside, which could result in longer term benefit.
On the business services side in Q1, we saw continued revenue growth with year over year increases of 22.7% or 11.9% excluding fidelity.
However, unlike our experience with residential HSD. The Kogan 19 pandemic has caused some pressure on both existing and new sales just small business customer customers, which make up a little more than half there's going to services revenue.
We are working closely with small business owners to help create a bridge until the economy reopened and they can resume some semblance of normal operations.
As of last week, we had a decrease of approximately 1% and monthly recurring revenue for commercial customers that have either been parts were downgraded.
Strong growth in our two core lines of business allowed us to generate a total of $321.2 million, an adjusted EBITDA of $157.7 million into first quarter.
Adjusted EBITDA results factored in a combination of lost revenue an incremental expenses nearly $2 million related to covert 19 and I'll respond.
Our management team and board of directors have always been focused on long term value creation and that continues to be our focus today.
That being said, we understand the desire for clarity around what is happening now.
We are seeing some of the fundamental changes businesses and customers are adopting during this pandemic, which are in alignment with our company strategies, Although we can't predict the duration of the current environment or the impact to the economy in general we do know the impacts our business has already felt during this emergency and how many industry generally performed.
In the last recessionary periods.
The ultimate effect of the items on about to discuss are obviously on certain may fluctuate based on a variety of micro and macro and micro factors as well as any potential legislative or regulatory regulatory approach.
[noise] advertising sales business services late and we cannot be as data overage charges on the residential data are the revenue items, most negatively impacted in the near term.
Labour cost by Dot and donations to support our communities are the expense items that have been elevated the most in the near term.
Longer term impacts assuming me on turning extended recessionary period cannot be predicted because we can't say for certain how consumers will behave but our industry has historically done well positioned to whether a recession.
We believe that the critical importance of HST for most households will only grow and our value priced and reliable HST products will be there to serve our customers.
If history is our guide the risk for video customer downgrades on churn that's likely more significant yeah. As we have discussed on previous calls Armenian cash flow and this line of business with minimal.
So while we are starting to feel some effects from a recession, we feel reasonably well positioned for financial sustainability and future growth.
Lastly, our conservative balance sheet only adds to our confidence with respect to our financial position.
And now I'll turn it over to Steven for discussion of our first quarter results as well as our financial position liquidity and leverage [noise].
[noise] Thanks Julie.
The first quarter of 2020 produced solid financial results revenue for the first quarter were 321.2 million compared to 278.6 million in the prior year quarter.
Presenting at 15.3% increase.
The increase was fueled by residential HSD revenue increased 19.4% in a business services revenue increased 22.7%.
Excluding fidelity operations total revenue increased 3.8% Gallagher.
Net income in the first quarter was 69.3 million net income per share on a fully diluted basis was $12 a five cents per share.
Operating expenses were 105.9 million or 33% of revenues in the first quarter compared to 94 point.
5 million worth 33.9% of revenues and the prior year quarter 90 basis point improvement.
Selling general and administrative expenses were 62.9 million or 19.6% of revenues in the first quarter compared to 61.4 million or 22.1% revenues in the prior year quarter 250 basis points improvement.
Adjusted EBITDA was 157.7 million for the first quarter and increased 18.5% from the prior year quarter. Our adjusted EBITDA margin increased 130 basis points year over year going from 47.8% to 49.1 person.
Capital expenditures totaled 64.8 million for the first quarter of 2020, which equates to 41.1%, but adjusted EBITDA and 20.2% of revenues and includes 8 million related to fidelity operations.
The first quarter of 2020, we paid 12.8 million in dividends to shareholders.
From a liquidity standpoint, we borrowed 100 million under our revolving credit facility during the first quarter for general corporate purposes, including four potential and completed small acquisitions and investments.
We had approximately 242 million of cash on hand as of March 31st.
We continue to generate significant free cash flow.
That's a quarter end our debt balance was approximately 1.9 billion consisting of term loans revolving borrowings revolver borrowings and finance lease liabilities and we had 221.3 million available for additional borrowings under our revolver.
Overall, our debt to last quarter annualized adjusted EBITDA after netting cash on hand against debt was 2.6 times, providing us with ample liquidity.
A few other items I want to discuss before we take questions.
First we do not anticipate a delay in our overall three year timeline to integrate fidelity yeah.
We are fortunate to have had a long pre closing period to prepare and we believe the knowledge and experience gained in our prior integration projects has and will continue to make us more efficient.
This combination gives us confidence that we can achieve a seamless integration over our originally planned doctrine.
Second as a reminder, our annual video rate adjustment, which was implemented in February of last year was implemented in March this year.
In addition, as we communicated last quarter, we map existing customers on legacy new wave pricing and packaging or to our spark like packages.
Third in light of our extended commitment to the Fccs keep Americas connected slides along with our other efforts to provide continued connectivity and he is the financial burden for customers and community is impacted by the cold at 19 pandemic, we anticipate our second quarter will be negatively affected.
Julie I already mentioned the drivers for this include lower data overseas late charges and reconnect studies as well as higher labor bad debt and other expenses.
We also anticipate the due to the current environment, we'll see reduced advertising and business services revenues.
We believe these negative impacts along with potential for others will be partially offset by a larger than usual quarterly increase in new residential data customers in revenues.
The extent of such impacts will depend on the duration and severity of the pandemic among other factors.
Lastly, on the subject of M&A and use of capital we will continue to follow our balanced strategy to deploy cash and grow the business.
As we said before that entails a combination of seeking broadband related acquisitions and investment opportunities in rural markets as well as capital projects intended to drive long term growth.
On that topic I Wanna mention that we recently closed a small investment in a fixed wireless company serving rural America in close proximity to our current geographic footprint.
We also provided letter of credit support to another fixed wireless company with similar characteristics.
Whether its third expanding our existing footprint, where acquisitions and investments that looked like clear ways fidelity or fixed wireless. We believe these capital deployments are in alignment with our strategy to bring reliable broadband so small an underserved communities across the country.
Finally, we're now ready for questions.
We will now begin the question and answer session to ask the question. Please press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up their hands up before pressing Nicky.
Withdraw your question you Congrats Star then too.
Our first question comes from Philip Cusick with JP Morgan.
Hi, This is sebastiano on for Phil.
Just a quick question and truly are Stephen if you could perhaps quantify the number of subs that are either on the FCC pledge or the $15 megabit offer that's currently in the market and for that 15 megabit.
Offer.
Have you seen any subs trade down or is this kind of more forward year on new acquisition side.
Oh, hi, spar failure, what's truly as far as the 15 Meg plan goes we've had less than 2% sell into that plan.
The people that are calling us and there are quite a lot of them. We're going online on tour shopping cart are seeking out higher level plan.
200, megs or more.
Very little take rate on the 15 Meg plan.
As far as commenting on how many people are.
Covered under the C.C. keep Americans connected play on that all of our customers I mean, we're committed to not assessing a late fee or just connecting any <unk> residential or business HST customer until the pledge period and at the end of June.
Maybe just kind of following up on that is there a number of subs, perhaps that have gone into late payment or in arrears <unk> any color on that.
Sure. It's hard to say, you know who exactly as in arrears because their customers that they pay us regularly and then there's customers that pay when they get reminders that they're about to be just connected but that being said.
We have about 10000 more account.
At our past due at this stage done we ordinarily would have.
Okay. That's helpful and it's even just touching on the M&A aspect.
Yes, I think you mentioned, two small acquisitions or better credit and small investment.
Were they both fixed wireless and then just on that have you seen an uptick perhaps in.
Since last quarter you.
Touched on perhaps you're willing to do some JV or a small type investments have you seen an uptick in the co bid environment or any color on that would be great. Thanks very much yeah.
So I'd say both of these I would say fall into that investment bucket. Neither one of these were actually acquisitions were just making joint venture investments in a these two fixed wireless companies that we mentioned.
And so they were both under way before the started I don't think that.
We've seen any.
Near term impact I think you know what will come down the road I think it's to be determined but I would say yeah, we had a variety of things and process and most of those things and process of continued.
But nothing nothing new as popping up yet I think there's probably still some level of.
Waiting to see what the markets are going to do from a debt standpoint, and other before Oh, certainly people jump in with opportunities.
Thank you Stacy.
Our next question comes from Gregory will again with Cowen and co.
Great. Thanks for taking my questions. So it sounds like off the last question is very middle selling the low end plans. So when you talk about the solid second quarter, you're seeing thus far in terms of that it would take to say that churn is extremely low in your existing base or gross adds are still strong because you're still allowing guesstimate at home which variable.
Our it are there and.
If I could ask one on ARPU and you also impacts you waving that data overage eat you help characterize that and what that impact could be maybe fine tune that maybe perhaps how many subscribers typically go over I. Thank you.
Hi, Greg its Julie so our churn.
Based on our canvassing.
H D is incredibly low in the industry and of course, it's either lower because we're not just connecting anyone for non payment.
Let's turn has very low but that being said, obviously, we've already talked about the.
The number of installations that are happening on a weekly basis, our record breaking almost each and every week.
So ARPU I think.
I couldn't quite get your your cellphones wavering, a little bit but the second part of your question seem to be around how many people typically go over our data guidelines and that isn't something that we.
Publicly I draw specifically, but what I can tell you, it's far and away the majority and I mean, the majority of people do not go over our data guidelines.
The majority of people don't even know they exist because they stay comfortably underneath of them, but there are they a small percentage that you go over and for those you they.
Can upgrade into a higher level plan with more data or possibly take our unlimited option.
Well I will pay for the additional gigs their choice.
Great guys, just one thing I'd add to the first question you asked about because we're not able to go on the homes, we're still doing installs, even though we're not able to go into homes and I think thats one of the places where you know I think our team has just been fantastic and their way to figure out how to do installs without going into home and the amount of.
That's herself installation and figuring out ways to install people, even though we don't have a drop down there it's been.
Awfully impressive to be able to find the volume yeah.
And then on the other question too is.
There's a question Julie mentioned about well, we don't we have very few people who go over we probably have more people go over but we don't really think of that has lost revenue now because they wouldn't have been going over historically, so even though we gave them that way. If you think about the progression. There is not a huge amount of lost revenue associated with that although we'd be giving up revenue for the fact that usage.
Spiked in the short term.
But it was the right thing to do yes, absolutely.
Got very helpful. Thank you.
Our next question comes from Craig Moffett with Moffett Nathanson.
Two things one one I know you've talked about it a lot, but I just want to make sure I'm perfectly clear when when you talk about the headwinds from the lack of a of usage overages and what have you are you, suggesting that the would that overall broadband ARPU will be sequentially.
It is next quarter or year over year negative next quarter or just that it will be those will be meaningful headwinds relative to two prior years.
And then.
I guess second as you you've talked a little bit about M&A, but but.
I guess given the dislocation.
In everything from a from operations to the credit markets is this an opportunity for you to to.
Try to find perhaps smaller cable operators that may be more eager to sell of given that the financial environment.
Sure I wouldn't I would say on the first question since we don't give guidance, we wouldn't really say oh, what the forward looks like all the way would say is it will be less than it would have been without it and I think the one thing. We said was that we had a 2 million dollar impact of all of those things in the first quarter, what's really wasn't until the second half.
March and so that's really only kind of a half a month impact. So all things added together you can say as a four to 5 million dollar amount the impact.
At the Max and then that's offset by the higher growth that we've had any incremental revenue that will get from more customers and more activity and then on the M&A, Brian Yeah, We absolutely think that there will be some opportunities that present themselves.
And that's where we think I'm, having a balance sheet like we have a should put us in good position that we want to make sure that were and great. Both both financial and operational perspective being ready to take advantage of those opportunities when they present themselves.
Got it thank you.
Our next question comes from Kyle Evans with Stephens.
Hi, Thanks for taking my questions, it's been almost a year and a half since you closed my clear way could you give us an update on how that's kind of flowing through the rest of the business and what you've learned over the year and a half and then you've had two questions that are focused on kind of the sell side of potential M&A could you give us an update on what you're seeing from maybe the private equity.
Infrastructure from side in terms of their level of interest in doing acquisitions. Thank you.
Going to happen I'm sure, yes, so clear wave.
Hi, This is a wonderful acquisition the folks there are I don't want to say there they're untouched by the pandemic can certainly they they are but they continue to complete installations at an accelerated rate ever since we took ownership of them we have.
Allowed them to the capital in order to set up a second construction site, if you will Uh huh.
They are continuing and actually the sparkly business folks are as well to sell enterprise businesses throughout the.
Pandemic, we can tell you stories that that would really warm your heart I mean, you can imagine what they who who's coming to us during these periods of time I'm asking for service.
So a clear waiver is doing very well throughout the pandemic.
Most of those have found a way to closing even though it sounds like financing was probably a tougher piece down the stretch.
Then they thought it was going to be going into it a there was other I would say smaller transactions that have managed to go through the process and continue to get done and then there is other transactions, where I think they just decided to take a pause.
But in talking to private equity groups I'm talking to infrastructure funds I think they seem as interested in ever in the space because they see the value and I am I think especially those infrastructure funds, who made the move into just telecommunication networks in general I think a lot of them are very much better than others, who hasn't and so I think.
This is only.
Strengthening the position that are types of networks are truly core infrastructure and infrastructure like.
Yes.
One quick follow on you mentioned that you expect it up.
A seamless integration fidelity and no change to your three year timeline are there some milestones that we should be looking for along the way. So that we know you're on track. Thanks.
I'm not sure Theres any that we would actually tell you, but now [laughter] Oh, Okay. We've already we've already integrated you know payroll and benefit.
We're eminently connecting networks together.
Oh, the checklist applies yes things, we did with with the others yeah. They actually team led by Eric Lardy has done such a great job and getting there I mean, you can you can tell so many lessons we've learned through the new wave process and so many things, but just how then become issues and some of it also helped by the fact that just the timing of the Viacom contract.
And so many things that we were able to realize sooner in this process because of the timeframe, we had to close but I would say, we're very well down the road of that and honestly the bigger pieces will be spending the capital on the the upgrade network piece of that so the integration Capex is the piece that will take over the three year timeframe, but a lot of the.
At the heavy lifting on the expense side is well underway.
Thank you.
Our next question comes from Frank Louthan with Raymond James.
Great. Thank you very much talked me a little bit about the impact on your SMB business, how you're looking at that kind of going forward what the sales.
Sales funnel looks like three due this quarter and what sort of percentage of your.
Customer base, there or more at risk and so forth and then with the the interest in the in the West is that something get further interest in wireless and looking ahead. Some of the wireless lighting boxes that are coming up thanks.
Oh, well start reversing I guess with regard to west as Frank.
We are agnostic on the technology that will deliver broadband into rural America. So.
We consider that are sort of space and so whatever it takes to bring people.
The connectivity that they need so I'd say yeah.
Let's see first for SMB, we talked about SMB, representing about half of our total business services revenues.
And.
Just recently so this would be after the first quarter.
Most recent counts are 1%.
Our recurring revenues have been either paused for us to be downgrades were lower level of service.
How how this turns out is I mean this is another time, where I'm very thankful to see.
Geographically diverse I mean, we have states that are already opened in are doing okay. We have states that have had very little of health effect from this pandemic not that it's going to stay that way, but so far there they're operating just fine. So the variability across our state is quite wide how it turns out is.
The thing we are going to be watching very closely.
No. The one thing I would add is on the on the business side clearly there's some businesses are closed and so the sales funnel related to that piece becomes tougher at the same time theres a lots of businesses that need more capacity there you've got their people working from home so everyone to be being in school districts trying to teach through that process and so I'm so with all of that.
That creates additional bandwidth needs and so.
Our we have our sales teams focused on any and all of that I'm trying to make sure that where there's demand we're meeting that demand and wind businesses open back up that were there to either turn them back on or turn them up for the first on.
Well I won't talk to it.
Relative to normal I saw their results from last month, and I was quite astonished at what they were able to do.
Great. Thanks very much.
Our next question comes from Norman Kramer with Kramer investments.
Oh Hello.
Hello, Good afternoon, I've, a couple of questions I'm personally I'm on familiar with the term fixed wireless so I'm wondering if you could explain please.
What that business what that business means exactly in other words, what type of business. It is.
And you had mentioned several doing several smaller acquisitions, what's sort of an acquisition would you consider rob.
All are either in terms of.
Stripers or or revenues or whatever color you could give on that would be great.
And lastly, it did not mention.
Service service extensions further out on your network. So it did you have anything you might add there.
Thank you so much.
Sure. So on the first question of fixed wireless fixed wireless is basically services throughout the country. There generally referred to as with wireless Internet service providers that is basically the most part of point to point tight Internet service, that's done done wireless late and so.
And especially in very low.
Density areas were building to those is not economical and so as we think about it Julie mentioned earlier the 950 communities, we have the across 21 states.
All outside of those very small communities are still thousands and thousands of homes all around us the density themselves wouldn't justify building out too, but still need Internet service and their choices generally are either eight low level DSL or a satellite service of some sort or fixed wireless and we think fixed line.
Our list is an interesting technology, we're not going to be in the satellite space. We're obviously not going to be a in the DSL space and so that leaves the opportunity to still provide those customers that surround our communities with the technology that still provide a broadband level service and that technology continues to improve and we've worked on both deploying.
Get ourselves in a handful of markets, but then also making investments in these companies that had been doing it for a period of time, both for the learning as far as what's the value creation opportunities that these small companies themselves out and so that's that's the nature of what we're looking at and those from a small investment standpoint.
You know I suppose it really comes down to I would tell you that we'd probably think of anything from you know 5 million to 20 million an EBITDA is probably what we would consider small once you get over 20 million of EBITDA.
At least on small anymore. It may not be larger at that point, but it's probably not in the small category anymore and many of them. We also think about okay. What could we do just with our existing balance sheet combination of the free cash flow that we generate combined with revolver capacity.
We have and how can we fund those acquisitions. So that's the context of how we think about those.
And then lastly.
One of your question about extensions I think extensions.
Really just for the most opportunistic where for instance, we're serving a school district and you know three of their buildings are outside of our existing footprint and so we have the opportunity to build to those buildings and they're doing that we pass additional businesses would increase our addressable market or we win a fixed or we wouldn't fiber to the tower contracted.
About a 48 hours across a variety of places all of that build requires us to put additional fiber in the ground that additional fiber passes buildings and as we do that we once again increased our addressable market and now we go sell to all of that new addressable market that didn't exist. So thats, what we talked about when we talk about extending our network.
Okay. That's very very helpful. Thank you.
[music].
Our next question comes from Brandon Misspell with Keybanc capital markets.
Okay, great. Thanks for taking the question I guess to two if I could one through June Julian your prepared remarks, you sort of alluded to evaluating your existing data plans as we're hoping you could elaborate on that and what it might mean in terms of your ability to offer unlimited data and or change around the pricing structure that you have currently.
Second for Stephen I was hoping you can provide us some stats I think similar to what we're trying to get out is it sort of a percentage of the base that.
Typically receives an over John a monthly basis same thing with the unlimited data product and then I'm not sure. If he said it but can you share with with US the percentage of sales that were self install during the quarter. Thanks.
Hi brand and its really so yeah obviously.
Well first of all we evaluate our data plan guideline.
Every year.
And I don't mean, we just do it annually, we're watching it all the time, but but we've made adjustments here to work.
On an annual basis.
Clearly we have a situation now where we don't we don't mean to penalize customers for going over data plans. We set data plans that are that make sense.
The majority of far and away the majority of customers in the plan.
With the shift and usage, we think it's only prudent to take a look at that data and try to triangulate you know what would be fair and normal under these new circumstances.
That's modeling and that process is going on now we saw data utilization consumption that is ROE you know through the first quarter through April.
My through the beginning in May and now it seems to be settling down and actually going back down now that's probably you know people are starting to maybe go back to work schools are starting to.
Closer.
He's done so that makes sense that modeling is ongoing I can't tell you, what they're going to be because I don't even know what they're going to be because we're still modeling it.
Do you have unlimited [laughter] data, we have that option. It's currently.
For $40 a month, so any plan can opt into unlimited and in fact, we sell that in about 20% of the time talking around the time, our new customers coming in the door, we'll take that option, our pricing and packaging and what we and flying.
Blacks started last January and it's working very well, we don't I don't think we have a reason that all to change our pricing and packaging at this time data guidelines, yes pricing and packaging no. Currently we have over 65% of the folks coming in the door opting for a plan that is.
200 legs or higher.
And.
Is the churn is incredibly.
Free FICO goods, the churn was incredibly low which.
Tells us that the satisfaction with those plans and and the.
Value of those plants is right size so other than.
During the guidelines I think that's yes.
Great. Thank you.
And then on the err on the other side as far as the stats around well I can talk about it softens stuff so self installed.
20% first quarter 2019 to first quarter of 2020 and that will be a surprise to anyone.
And tough and sulfur only available in legacy Cabo at this point in time on either new waiver fidelity or have them.
Yes.
And then on the other.
We're not going to break out the variety that gets to that $45 million a month because.
We could talk about overages, but overages would be compared to what they were historically to what they are now so how much of that is really lost revenue versus just revenue you could have had additionally, and so I think that's kind of the guidance will give around the incremental slas cost and lost revenue I do.
Say that our commercial or business services VP wanted to make sure. We mentioned that April sales were actually higher this year than they were last year, which Ah you know I think as a good sign of businesses in the markets we serve.
Great. Thank you.
This concludes our question answer session I would like to turn the call back over to Julie along with me for any closing remark.
Thank you Ali.
Oh, we appreciate your time today, let me leave you with a few closing thoughts.
Now as always we are living our purpose promise and value.
We strive to keep our customers connected to what matters, including their families their children's education and your ability to on a living we are fully committed to this mission I.
I went to close again I'm thinking each of our associates for their tireless efforts to fulfill our purpose and serve our customers with essential conductivity. During these uncertain times.
We appreciate everyone joining us for today's call and we look forward to speaking with you again next quarter.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.