Q1 2021 WideOpenWest Inc Earnings Call
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Good day, and thank you for standing by.
And welcome to the wide open spaces first quarter 2021 earnings call.
At this time all participants are in a listen only mode.
From the speaker's presentation, there will be a question and answer session to ask the question. During the session you will need the press star one on your telephone.
Please be advised the today's conference is being recorded.
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I would now like to hand, the conference over to your speaker today and.
And that is going to the Andrew Posen, Vice President head of Investor Relations. Please go ahead.
Good morning, everyone and thank you for joining lineup in the Western <unk> first quarter 2021 earnings call with me today is Teresa elder Wow, 's, Chief Executive Officer, and John Rego, whilst Chief Financial Officer.
When we get started I would like to remind everyone that during our call. We will make some forward looking statements about our expected operating results our business strategy on the other matters relating to our business. These forward looking statements are made in reliance on the safe Harbor provisions of the federal Securities laws.
And are subject to known and unknown risks uncertainties and other factors that may cause our actual operating results financial position or performance to be materially different from those expressed or implied in our forward looking statements.
You are cautioned not to place undue reliance on such forward looking statements.
We disclaim any obligation to update such forward looking statements for additional information concerning factors that could affect our financial results of 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 on today's call and in our earnings release, we refer to certain non-GAAP financial measures. While 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.
<unk> presented in accordance with GAAP reconciliations.
Reconciliations between GAAP and non-GAAP metrics of our reported results can be found in the earnings press release issued today, a copy of which can be found on our website.
Now I'll turn the call over to wireless Chief Executive Officer Teresa Elder.
Thanks, Andrew welcome to Wow's first quarter earnings call.
In addition to our press release and quarterly trending schedule that are available on our Investor Relations page. We have also included a presentation that we are using to complement our prepared remarks.
This was another great quarter for Wow as the momentum we built throughout last year continued into the first quarter.
Our broadband first strategy drove our results again this quarter pushing our of high speed data revenue to its sixth consecutive record quarter as we added 10000 HST subscribers.
In the first quarter, our total revenue increased 1% from the same period last year to 286 million.
Driven by growth in our high speed data business, which grew 12% year over year, two of 153 million more than offsetting a decline in video and telephony revenue during the quarter.
Our first quarter adjusted EBITDA was $112 million up.
More than 13% from the same period last year.
'twenty 'twenty, what's the monumental year for our industry in so many ways.
Broadband utilization increased across practically every facet of our lives.
From streaming video content to supporting education via remote learning and the significant number of people, who now work remotely high speed data services delivered over a high quality network continues to be an extremely important aspect of our daily lives.
In 2021, the reliance on high speed data has not abated, which further underpins our broadband the first strategy and our strong results this quarter.
Well, we're very focused on growing our high speed data business, we continue to work with our customers to ensure that they have excellent video options to choose from whether it's using why would you be plus our IP based video offering.
We're signing up with streaming alternatives, we remain aggressively focused on driving our total subscriber numbers higher.
In fact for the seventh consecutive quarter, we increased our total number of subscribers as we have every quarter since launching our broadband per strategy in early 2020.
During the first quarter, we added 10000 high speed data argue us, bringing our total to nearly 824000.
Consistent with the past two quarters, 86% over the vast majority of our new customers are buying of our high speed data only service.
The significant increase from the same period last year, when 66% of new subscribers purchased our high speed data services.
In the first quarter of 'twenty 'twenty 188 per cent of new customers purchased speeds of 200, Meg or higher which is up slightly from last quarter and substantially higher than Q1 last year when 51 per cent of our new customers purchased 200 Meg speed.
They're higher.
H S. The ARP, who increased slightly from last quarter and remains significantly higher than the same period last year.
Largely reflecting customers' purchasing higher speeds.
In the first quarter of this year H S. The ARP, who was 62 10.
Up from $57 70 in the same period last year.
Our edge out strategy continues to deliver growth in terms of both homes past and argue you use and is showing positive results with increasing penetration rates.
Both of the 2019 and 2020 edge out vintages increased again this quarter with the 2019 vintages, increasing to 17, 3% penetration up from 16, 3% last quarter.
And the 2020 vintages increased to $17, 7% penetration.
Up from 11, 5% last quarter.
Although the lingering effects of the pandemic are still limiting the full potential we expect to see some incremental acceleration of the edge out in the back half of this year.
In the early stages of last year, we announced our broadband per strategy and outline our focus on high speed data products and services, which enabled us to respond to customers' needs, while still playing to our strength, which clearly includes the quality of our network.
This is one of the key reasons, we feel confident about our ability to continue to execute this strategy.
During the past few years, we've made strategic investments in all 19 of our markets to bolster our advanced fiber rich network, including standardizing and simplifying it through the deployment of DOCSIS three one.
Which is now fully implemented across nearly all of wow's footprint.
These actions have enabled us to support IP based products like Wow T V plus or alternative video options, including streaming services that ensured the network continues to deliver flexibility and the higher speeds consumers increasingly demand.
The quality of our infrastructure has also been a key reason that we've been able to quickly respond to challenges.
Last year during the pandemic, we experienced a peak increase of more than double our normal volume of broadband traffic.
Due in large part to the network investments that we've made the network successfully adapted to the significant growth in usage.
Earlier this year, we experienced an ear for tornado in Newnan, Georgia and within seven days more than 90 per cent of our affected customers had service fully restored.
This not only reflects the quality of our infrastructure, but also wows commitment to our customers as employees worked tirelessly to get everybody back up and running.
Well, it's always been recognized as a leader in providing value and accessibility and the products and services we provide.
We're excited about the numerous federal programs being introduced and the opportunity they give us to connect and bring the value of Wow two more homes.
These programs are being established to ensure that the infrastructure debt to promote affordability and accessibility of broadband.
Last year, we introduced a number of products and initiatives, including.
Fiber flex for small and midsized business.
Why was the Internet select 50 plan for low income households.
We participated in the keep America connected pledge.
We continue to be part of the AC He can ex and education Super highways K 12, bridged the broadband program for states and school districts.
A program designed to provide the internet access for students and low income households.
We now also offer the Wow Internet for education program, where families who qualify will be eligible to receive wireless Internet select 50 plan.
In addition to these while specific products, we joined the FCC's emergency broadband benefit program to support communities in the households across the country that are struggling to afford internet service during the pandemic.
The E B the program will allow eligible households to remain connected to services and resources they need for critical access to their jobs health care information and remote learning.
Those participating in the FCC's EBV program can receive discounts toward their monthly broadband services as well as discounts unnecessary equipment, such as laptops desktop computers or tablets.
These initiatives and our participation in the federal programs reflect while its larger mission to work to eliminate the broadband inequities that may continue to impact many communities even in a post pandemic world.
To conclude these were solid results and I'm really pleased with the momentum that has carried over from last year into the first half of this year.
The man for broadband remains high and we believe that Wow is extremely well positioned with the right people and the right strategy to continue capturing this exciting opportunity.
Now I'll turn the call over to John who will go over our financial results in more detail.
Thanks Teresa.
Our first quarter delivered strong results that exceeded our expectations and reinforced the strength of our team and our broadband first strategy and the.
The first quarter total revenue increased 1% to $286 3 million.
Okay.
Yeah.
Reflecting the 12% increase in high speed data revenue, partially offset by declines in video and telephony, which decreased 10% and 11% respectively.
The growth in high speed data revenue predominantly reflects the addition of new customers as well as existing customers buying higher speed tiers. The.
Outperformance in our high speed data business contributed to our higher EBITDA in the first quarter, which increased more than 13% from the same period last year to $112 4 million.
What is the adjusted EBITDA margin of 39, 3% also a significant improvement from the same period last year.
As you can see on this next slide our incremental contribution margin sort of slight decline sequentially, but continues to be significantly higher than the same period last year.
Consistent with the improvements we are seeing in our adjusted EBITDA and EBITDA margin.
In the first quarter the incremental contribution margin was 67, 2% up from 63, 6% in the same period last year.
In the first quarter, our Capex increased by $1 3 million from the same period last year predominantly due to timing issues as of <unk>.
Couple of items were pulled forward late in the quarter.
We continue to expect our full year capex to be consistent with where slightly lower than last year.
Our total free cash flow increased by $23 9 billion from a year ago to $18 3 million and with regards to liquidity and leverage we had $36 1 million of cash on hand, and we've lowered our leverage ratio to five times.
Finally, before we open the call for questions I would like to talk about guidance.
Last quarter, we reintroduced guidance for the quarter and held back on providing expectations for the full year.
Although there still remains the degree of uncertainty regarding the pandemic, we are getting more visibility into the year and wanted to provide guidance for both of the upcoming quarter and the full year.
For the second quarter, we expect total revenue to be between 280 and 283 million.
High speed data revenue to be between 154 and $157 million and.
And the adjusted EBITDA to be between 110 and $113 million.
We also expect net additions to be between 3500 5500 in the quarter.
For the full year, we expect total revenue to be between 1 billion 100 of $18 million to $1 billion of 121 million high speed data revenue to be between 629 and $632 million.
And the adjusted EBITDA to be between 458 and $462 million.
We also expect high speed data net additions to be between 28000 to 32000.
This was another strong quarter for well we are executing on our broadband first strategy. We are building on our momentum and we are delivering strong results and now we'd like to open the call for some questions.
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He would like to ask a question. Please press star one on your telephone keypad. The first question comes from the line of Tim Nolan with Macquarie.
Okay.
Hi, everyone. Thanks very much.
A couple of things I guess first just to double check the trends going into Q2 looking at the guidance of the HST.
Net adds if I'm looking at this right it looks like a bit of a slowdown in the year over year growth rate and yet it.
It looks like pretty decent revenue growth, implying the <unk> is going to be still strong in both of those I'm guessing or just comps versus what was the very unusual quarter last year. If you could just confirm that I'm looking at that the right way and then the second half maybe it is a bit more of a straight line.
Yeah, I'll start it if you'd like.
Excuse me, yes, there are a lot of folks think 2019, the better comp for 2021 'twenty 2020 was pretty unusual and yes.
The b that as it may.
We're seeing we're seeing a bit of debt, but our expectations for the balance of the year of pretty strong I think we're expecting a little bit of return to normalcy.
And.
Historically in these types of businesses Q3 is usually a very powerful quarter. That's when people move their holes and kids go back to school et cetera et cetera. So that's part of it.
The <unk> is.
We still expect and anticipate that the opportunities will continue to increase we are still seeing a lot of folks tearing up the higher speed.
We see people excuse me, we see people.
The whole home Wifi solution, and they're gonna be into the REIT products that'll be sold on the to the Wifi customers as well. So I think we have paths to get there.
So I'll start with that of two 3% of once that once the jump in.
Yeah, I think that's right.
Hard to know, but we think maybe this year, we'll have more of a return to normal seasonality, especially as we get into Q3 with back to school.
And we also know that it was really in 2020 that we also did our pivot to broadband first.
So we are thinking that.
2019 is an interesting comp, but we have aspirations to do better than 2019, certainly and we believe with all of the vaccination the economies starting to open up which will certainly help and we also.
Don't know yet quite what to expect from some of the programs like the emergency broadband benefit program it could be that it just helps churn.
It could be some net additions, but we're not quite sure on that but all of those we think are some good trends for the future.
Yes, great no a lot of unusual factors in Q2 last year obviously.
Can I ask another question. Please on video you mentioned your while TV plus is now at 95% of your footprint could you talk a little bit about what the actual take up of that is the shift from linear to that and also comparing that versus any other streaming alternatives that you mentioned not of wild TV plus but people just taking another video service.
Yeah. So what we're seeing overall of especially of new customer acquisition. As we stated the vast majority of our customers who are coming in our HSV, the only as well as HSE only with some kind of the streaming service. So in terms of the new customer take up at its small but it is an alt.
Furniture for customers, who like that curated video product and we're happy to provide it.
It provides functionality like our traditional services haven't before we're now launched on things like mobile tablets and devices. So it really provides of a robust experience for our customers. We're really just now starting to kind of reactively when customers want to upgrade of our existing base move them to the other.
P T V or wild GB plus service.
And we will continue to do that more as time goes on in transitioning customers over but we've been very pleased so far I don't think we give out actual numbers on the uptake I think we continue to the overall curated video as a product declining as the business but.
For those customers.
Still take it we always want to provide a high quality service and we are.
Okay, great. Thanks for the info.
Yes.
The next your next question comes from the line of James Ratcliffe with Evercore ISI.
Hi, Thanks for taking the question a couple of if I could first of all on the <unk> and similar programs can you give us an idea of how large the potential population for up selling on your existing customer base are kind of customers.
Customers you believe are qualified for the subsidy.
And secondly, you know a lot of discussion around broadband infrastructure spending and the like and I'm curious what your views are on.
The costs and the ability to increase your upstream speeds because depending on how the broadband is defined for these programs clearly you've got no problem with the downstream but.
The federal government does decide that's a 100 by 100 is qualified the broadband then you'd need to expand your upstream and what the costs and opportunities there are.
Thanks, James I'll share.
That was the first one on the EBV program, you probably know it hasn't launched yet so it's really hard for us to know we have been approved and qualified we're ready to go when it launches, which I believe the set now for May 12 next week. So we'll know more once we get.
Our total in the water and see what's happening there in terms of Upselling from some of our existing.
Plans that we have that are for <unk>.
More challenged income families. We have seen some upsell opportunity as customers realize that the additional speeds can help them work and learn from home more than we have seen people upgrading and I think once the subsidy program is in place and they have the roughly $50 a month.
For those kinds of services I think people will take advantage of that which is what the program was intended to do so once again, we're starting to see a little bit of that but we will really know more after some of these programs actually launch in terms of infrastructure spending and speed I can tell you right now that customers are very happy with the.
Speeds that we have we have our one gig offering.
As well as the 500, Meg offering and 200, Meg and that really does the comedy its customers' needs as we look at our residential customer most of the bandwidth usage. They have is in download and so.
The upload speeds that we currently have are more than adequate for customers' needs, whether they're gaming or video conferencing remote learning or video streaming.
Do have the DOCSIS.
<unk> dot one.
That is now deployed in virtually all of our footprints and I believe the DOCSIS platform really is a terrific platform, which will allow us to continue to grow over time should customers need those kinds of.
Symmetrical speeds or higher speeds for upload and we have the ability to easily transition to do that without having to tariff streets and build a whole new network. So we feel very good about our technology path and our engineers are continuing to work on that path and announced.
While we've been able to respond to our customers' needs so well with the dramatic rise in bandwidth the band throughout the pandemic.
Great. Thank you.
Yes.
And your next question comes from the line cut gone morale with RBC capital markets.
Good morning, and thanks for taking the questions if I could I'd like to ask about broadband subscribers again, and maybe M&A first I know you just talked about this but I was hoping you could provide more color on the broadband subscribers outlook and what's really embedded in the 2021 guidance, especially as you think about the back half you did mentioned.
Some expectations for a return to normal seasonality I think starting in Q3, I guess as the country continues to reopen there is a sense out there the market churn may start to pick up that might be offset by more gross add opportunities.
But maybe the question is would you expect that.
As there are more selling opportunities in the marketplace that might drive drive up competitive intensity and how would you expect to react to that.
What we have continued to see our churn numbers the hip.
Storage record lows.
We have had record low churns for quite some time now and it has stayed at those levels and we're thrilled that our customers are loyal and are delighted with our services.
I think in terms of the market competitiveness.
And in some ways. When there is I think less market activity. The there is more competitiveness as customers.
<unk> are scrambling for net adds so as the market opens up I don't know what will happen, it's hard to predict what people will do it.
Terms of switchers, while has always been.
Very successful of getting customers, who are switchers and by that I mean, maybe people, who arent moving but we're looking.
Looking at the need for more reliable services, the better value and Wow tends to do extremely well in those situations.
With the customers moving more and as we get into the summer smart customers move in.
Turning to the a little bit of a pickup in that.
Our markets are very attractive markets for people to move to especially as people are looking at lower cost places to more permanently work from home. So we're looking forward to both of those trends.
Yeah.
I appreciate that thank you and then just if I could is there any update you could provide on what youre seeing from an from M&A perspective, I know the focus right now is running the business.
But are there any developments you can or would like to share.
Well of course, the you know we don't comment on any kind of rumors or anything like that but I think you know we've always been transit parents and the fact that we like some of the valuations that we've seen on some companies that are very similar to us in the marketplace. We've talked before about the astound transaction back last year.
Or even the hard grade transaction more recently this year.
Any other case, you know and we've talked about this I think on every quarter, we're always focused on lowering our leverage ratio and we're open to inorganic ways to do that as well just because we have been over the last 20 years buying and selling markets and in our business but.
But I did want to note that we're very close to achieving our leverage ratio.
Organically through our EBIT adjusted EBITDA growth of.
Less than five times, so of work excited to get close to that milestone.
Fantastic. Thank you so much.
Your next question comes from the line of thought <unk> Levi with UBS.
Great. Thank you can you talk a little bit about the competitive environment in high speed data and if you're seeing any change in fiber builds in your footprint and a question on edge outs. It looks like the 2020 cohort actually started to do better than the 19 cohorts is there anything to highlight there.
And what's your expectation for edge out sales this year. Thank you.
Thanks.
The barrier and let's see in terms of the.
Competitiveness in Hs D. I think the kinds of services, we offer especially on the consumer side are always quite competitive in that sort of the DNA of Wow, we have been of challenger brands. Since the day that we were established and so we are always going to compete and we compete on.
Many different aspects not just price, but really the speed and reliability of our network.
Providing an alternative or of choice to some of the larger brands are.
We've really worked hard on doing more to make sure we're easy to do business with and of course for 20 years, we've had a real legacy of being customer centric. So those things are still working very well for us I think in the environment now where people are still to some degree struggling with the budgets in some markets that there.
Is some pressure on promotions and we participate strategically on a by market basis, where we need to to make sure that we're continuing to get our share and that's worked well, but as you can see we all show a good about making sure customers are matched with the right speed for them and then often is help.
Yes drive enhanced.
The <unk> growth.
In terms of the fiber builds I think it's still very much of the way that we talked about it last quarter and we do have some overlap quite of bit of overlap with AT&T for example, and most of that by far the vast majority is what their DSL services and of course, we already have our advanced fiber rich network.
Of that can deliver one gig speeds and so we're very competitive.
That at the end of the day I think customers don't come to us asking for a certain technology. What they want is the service that meets their needs and they trust us to deliver it with a competitive price with a service that is reliable that has the array of offerings not just broadband but also services.
Like our whole home Wi Fi mesh network product, which customers just love that really gives them also of great Wifi experience in their homes. So taken together with things we do like even the same day installs those are I think the the things that really help us be competitive and.
The light our customers.
The third area you talked about was edge outs and yes, we're pleased with our edge out production in terms of the deeper penetration, which is what we wanted to do this year that was our strategy. We've built about 200000 homes passed over the last many years and we want to deepen the penetration in those edge.
And we've had some good success, especially as the weather gets better.
But as people are out in the about more and I'm thrilled with the some of the growth that we've seen and I think the growth of the 2019 versus the 2020 edge outs could be just a little bit you know, whether the where the weather is better where people are moving but we're pleased and all.
Of the edge out vintages that we've had are reaching those kind of business case metrics that we had hoped to have so we're pleased with the production, but I would say on the on the on the edge outs of looking at vintages remember in 2020, we pulled back construction quite a bit when the pandemic hit.
And it looks like our lowest.
Capex for edge outs in like a really long time, and we've changed the focus too.
Two penetrating more so you're just hitting a higher number on a smaller base.
For the 2000 20 billion I think that's part of it.
But again as we said last year when it hit and again the applies to 2021, where we're still going to not go back to the historic edge out Capex focus right now is penetrating of putting customers on the platform.
Got it thank you very much.
Your next question comes from the line of Frank Louthan with Raymond James.
Great. Thank you do you have an estimate for how many folks in your territory might be impacted by the EVP plan.
That'd be the the first question and the second question can you.
Walk us through the <unk>.
Bad debt reserves, you took last year during the pandemic and how you've been releasing those and what changes might have made in the last 12 months on the on bad debt and when we get to more of a normalized level. Thanks.
Okay, why don't I take the first one and John can take the second.
Terms of the EBV percentage.
We've done some estimates and we do think that there could be especially a lot of prospects. So non customers today, who could be eligible within our footprint for the E <unk> program.
So we're looking forward to being able to serve those customers with something that will meet their budgets, but we think of it could be a significant number it but like I said it doesn't start till next week. So we really don't know exactly what the uptick will be or if.
You know this is something that we're going to certainly promote the program and make sure people know that they could be eligible and so we've got a plan around that as well, but I think we'll know a lot more next quarter. After we have a little bit of experience with the number of bell.
Okay.
Okay and on the bad debt question.
Right, Yeah quite quite frankly.
Q1 of 'twenty, we beefed up the bad debt reserves in anticipation of the.
Not knowing what was going to happen I think our experience was better than we thought it was going to be I mean, we had left the we did have bad debt. We were part of the pledge etcetera, etcetera, but I think overall, we did better than we thought we're going to be I think we're down to two.
<unk> 2021, more historic levels, so to put some dollars around it for you I think we stepped up the reserves by a couple of million dollars.
Okay and use some of it not all of it.
Okay, Great and then just a clarification on the EVP.
So you're you're all going to market that do you expect this to be something that exists more where do you think the majority of this will go within your customer base will be existing customers that are eligible to start to take it or is this going to be of net.
The new additions and then.
How do you how does the customer qualified the they have to there or do they just tell you they're eligible or do they have to they have to pull something from the FCC can you walk us through sort of what the challenges are for the customers actually.
To get the the.
Voucher of whatever you call it.
Yeah. So the point it is a fairly rigorous program that has been set up of the federal government and we're just now implementing all of the kind of rules that are in place and training our representatives to handle that so the customer call in and they do have to meet there's a whole list of criteria of I believe it's even on the FCC.
Right.
About the E D D program and how customers have to qualify theres a number of different things, whether it's income or if they qualify for maybe some of the feed.
Speed programs. So there's a variety of ways to qualify but then of customer calls the interest and we have to work with them to get into this federal database to have them validated by the government. So it's not something we can just take the word for or we can independently say.
Debt. They qualified it is true the federal database similar to some of the lifeline surfaces, the telephone sides of the public familiar with it.
The pretty rigorous process to go through all of that and quite honestly I think just by definition, probably there are more customers, who don't have broadband today than those who do the qualified because the whole idea is to try to make sure of more customers.
You can have access to broadband we certainly think there could be some of our existing customers that also qualify and for those we will certainly help them get that subsidies. So.
It can take some of the weight off of their budgets and maybe even allow them to get to a higher speed the better meets their needs that help bring yep.
Yes, no that's great. Thank you very much okay.
Your next question comes from the line of Brendan municipal with Keybanc capital markets.
Okay, great. Thanks for taking the questions one for Teresa and two per John the Teresa the selling mix on HST is pretty strong could you update us on where the base stands.
And for John could you provide an update in terms of guidance for the year and Capex cash taxes cash interest expense.
And then just given the focus on the federal subsidies program.
Is there any expectation built in guidance for net.
The traveler additions from.
The subsidy programs.
Okay I'll take the first one thanks.
So on the.
We do have a trending schedule that we have put out as well. So in there we can say for the first quarter of this year, we're sitting at about 824000 high speed data customers and of those 291000 have the video so we virtually.
Don't have any customers that take video who don't also have high speed data and then we have 173000 telephony customers. So that's our current mix.
True said I was looking for was more along the lines of.
Penetration of speeds within the base.
The 100 200 Meg.
Because of the different product sets.
Okay.
I believe we put out on the web slides some mix on that set of shared that I think we just kind of say 200, Meg and above I don't believe we've.
Shared exactly what the mix is for.
For one gig and 500, but I can tell you that continues to grow and grow as customers applications are really.
The other lend themselves to higher speeds. So we're currently sitting with.
With the mix of.
But I guess, we put out the sell in for the mix of new acquisitions, and we show that at 88%.
It's certainly a little lower than the amount for the existing base as customers upgrade, but we're seeing similar trends where customers are upgrading faster and faster and of course. We also in December of last year upgraded our minimum speeds of 100 Meg across the board.
Okay.
Okay.
Okay.
Jumping on the finance questions Yeah sure go ahead.
Alright, so bring it on.
And our forecasting models that we build will be go to guidance.
There's nothing specifically built in that's going to assume we're getting some generous.
Generous HST adds because of programs like ABB.
I would venture to say in my upside case, I might've done that but not the not the baseline case. So the reality of what we're suggesting is.
More more more HFC more tearing up.
And hopefully of returning to normalcy, where Q3 again becomes like the killer quarter four for this type of business.
Cash taxes are de Minimis.
I mean, we still have.
$900 million of net operating loss. So I don't expect that we'll be paying significant taxes anytime soon.
On the interest expense a more interesting question. This is I've been waiting for the smoke since I got here. So on May 31 of the hedge terms out.
The interest rate hedge, which fixed the LIBOR at 276% on $1 3 billion of notional value goes away.
The annual cash interest savings of $23 million of which for this year, we will get $13 5 million. So we won't be paying the hedge starting on June one so.
Excuse me that'll be rather accretive to our to our free cash flow for sure. So hope that answers it.
And on Capex.
Yes, So capex our guide was flat to slightly down from last year, we did pull some stuff into Q1 from Q2, particularly CPE of little bit of a CPE purchases that we were doing.
Some of the infrastructure build that we were doing but my expectation is flat to down like we said on the last call.
Great. Thank you for taking the questions you bet.
There are no further questions in the queue I would now like to turn the conference over to Teresa elder for closing remarks.
Thanks, so much for joining us this morning, and thank you for your continued interest and support of Wow, We really look forward to speaking with many of you in the coming weeks so have a great day.
This does conclude today's conference call. Thank you for your participation you may now disconnect your lines.
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