Q4 2020 WideOpenWest Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 'twenty 'twenty earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation.
Participants.
After today's presentation.
There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone if you require any further assistance. Please press star Zero I would now like to hand, the conference every to your speaker today Andrew.
Thank you. Please go ahead Sir.
Good afternoon, everyone and thank you for joining our fourth quarter 2020 earnings call.
With me today is Teresa elder Wow, 's, Chief Executive Officer, and John Rego, whilst Chief Financial Officer.
Before we get started I'd like to remind everyone that during our call. We will make some forward looking statements about our expected operating results our business strategy and other matters relating to our business.
These forward looking statements are made in reliance on the safe Harbor provisions of the federal Securities laws.
Subject to known and unknown risks uncertainties and other factors, including most recently the economic uncertainty related to the COVID-19 pandemic that may cause our actual operating results financial position where performance to be materially different from those expressed or implied in our forward looking statements.
Cautioned not to place undue reliance on such forward looking statements.
We disclaim any obligation to update such forward looking statements for.
For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward looking statements. Please refer to our filings with the SEC, including the risk factors section of our form 10-K filed with the SEC.
In addition, please.
Note that in today's call and in our earnings release, we refer to certain non-GAAP financial measures.
Such measures include adjusted EBITDA transaction, adjusted capital expenditures and capital expenditures, excluding expansion capital expenditures.
The company believes these non-GAAP financial measures provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.
Now I'd like to turn the call over to <unk>, Chief Executive Officer Teresa Elder.
Thanks, Andrew.
Welcome to Wows fourth quarter earnings call.
In addition to our press release and quarterly trending schedule that are available on the Investor Relations page on our website. We have also included a presentation that we're using to complement our prepared remarks.
Our commitment to and execution of our broadband first strategy led to a strong fourth quarter and a solid year.
The adversity that characterized 'twenty 'twenty did not distract our team from making great progress this year.
We adjusted and adapted throughout the year adds the COVID-19 pandemic gripped the country.
We quickly moved most of our work force to working from home.
Accelerated the launch of self help and digital options like self install kits and live agent chat for our customers.
All while we focused on delivering meaningful results.
Including record full year high speed data net additions and a record quarterly and full year high speed data revenue.
In the fourth quarter.
Our total revenue increased 3% from the same period last year driven by growth in our high speed data business, which grew more than 13% year over year to a record $151 million.
More than offsetting a decline in our video and telephony business during the quarter.
Our fourth quarter adjusted EBITDA was 123 million.
13% from the same period last year.
The momentum in the fourth quarter bolstered our strong results for the year with total revenue up slightly from last year to 1.1 billion as growth in our high speed data revenue offset declines in video and telephony.
Full year HST revenue increased nearly 9% to a record $567 million.
We ended the year with adjusted EBITDA of $437 million.
The industry trends that we had been talking about for the past three quarters, including the shift in video consumption away from linear TV to streaming alternatives the acceleration of cord cutting and the continued increase in the importance of high speed broadband.
All underpinned our broadband first strategy.
We are capitalizing on this opportunity and see the impact of these trends on our results, which exceeded our expectations.
During the fourth quarter, we increased our total number of subscribers for the sixth consecutive quarter. Despite a net reduction in total or do you use.
Importantly, we're adding HSV only customers and keeping a significant proportion of customers who disconnect their video service, but maintain their broadband services, which so it shows the success of our strategy.
We're growing our customer base with an aggressive and targeted focus on being broadband first.
During the quarter, we added 4900, HST RG use and for the year, we added 32300 <unk>.
Just number of net H F D additions and wireless history.
Bringing our total H F DRG used to nearly 814000.
And as we saw last quarter.
86%, whereas the vast majority of our new customers are buying our H S. The only service.
Significant increase from the same period last year, when 60% of new customers purchased our HST only services.
Providing the best customer service is something we believe that sets us apart.
We understand that customers want choice reliability and higher speeds.
In the fourth quarter, we increased our minimum speed for existing customers to 100 Meg.
Well, we are capable of providing one gig speeds to nearly 100% of our footprint.
This is a testament to the strength and quality of our infrastructure, which is critical as customers continue to purchase higher speed tiers.
In the fourth quarter of 'twenty 'twenty more than 86% of new customers purchased speeds of 200, Meg or higher.
This is a substantial improvement over the prior year, when 54% of our new customers purchased 200, Meg speeds or higher and 79% in the third quarter of 2020.
Over the past two years, we have invested in our infrastructure, which has enabled us to provide an advanced fiber rich network with the flexibility to increase capacity in line with rising consumer demand for higher speeds that we experienced in 2020.
The combination of customers purchasing higher speeds.
And the September 1st rate increase on modems resulted in an increase in HST <unk>, which grew to $62. This quarter up from 57 at the end of the fourth quarter a year ago.
Our edge out strategy is another element of growth and is continuing to evolve.
We have refined our approach to edge out and we are increasingly focused on growing penetration across our footprint and reaching more multiple dwelling units.
Which represents an exciting opportunity and an efficient use of our capital.
Our edge out strategy continues to show positive results.
Senator Asian rates of both the 2018 and 2019 edge out vintages increased again in the fourth quarter.
The 2018 vintages increased 23%.
From 19, 6% last quarter.
And penetration in the 2019 vintages increased to 16, 3%.
Up from 14, 8% last quarter.
As we are now in the early part of 2021, we've included the penetration rates for our 2020 vintages.
Although they represent a smaller number of homes past due to the limitations imposed by the pandemic our penetration rates for these homes are growing quickly.
We ended 2020 with a penetration rate of 11, 5%.
2020 was definitely a challenging year.
But we maintained our focus and hit several key milestones.
Low T V plus our advanced.
P video platform is a great product with intuitive easy to navigate access to content and is now available to 95% of our homes passed up from 80% last quarter.
Wow T V plus helps facilitate our transition to work all IP services in our network migrating off of our legacy video product and unlock significant broadband capacity.
With a greater proportion of our customers buying higher speeds. This enables us to maintain our strong competitive position continue.
Continued.
In the longer term.