Q4 2023 Cable One Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cable ONE fourth quarter and full year 2023 earnings call. All lines have been placed on mute to prevent any background noise.

Ladies and gentlemen, thank you for standing by my name is Deseret and I will be your conference operator today at this time I would like to welcome everyone to the cable one fourth quarter and full year 2023 earnings call.

Deseret: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Todd Cucci, Chief Financial Officer. Please go ahead.

Deseret: If you would like to ask a question. During this time simply breath star followed by the number one on your telephone keypad.

Deseret: You would like to withdraw your question again fresh the star one.

Deseret: I would now like to turn the conference over to Todd Gucci Chief Financial Officer. Please go ahead.

Todd Cucci: Good afternoon, and welcome to Cable ONE's fourth quarter and full year 2023 earnings call. We're glad to have you join us as we review our results. Before we proceed, I would like to remind you that today's discussion contains forward-looking statements relating to future events that involve risks and uncertainty. You can find factors that could cause Cable ONE's actual results to differ materially from the forward-looking statements discussed during today's call, in today's earnings release, and in our SEC filings, including our annual report on Form 10-K. Cable ONE is under no obligation and expressly disclaims any Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles or GAAP.

Todd Gucci: Good afternoon welcome to the table.

Todd Gucci: 2023.

Todd Gucci: We wouldn't be where results.

Todd Gucci: Before we proceed.

Today's discussion.

Todd Gucci: Statements.

Todd Gucci: <unk>.

Todd Gucci: Risks and uncertainties.

Todd Gucci: You can find factors that could cause cable ones.

Todd Gucci: Two different materially.

Todd Gucci: Payments discussed during today's call today's.

Todd Gucci: Today.

Todd Gucci: Violence.

Todd Gucci: Report.

Todd Gucci: 10-K.

Todd Gucci: People wanted under no obligation expressly disclaims any obligation accepted required by law to update Walter's for making statements.

Todd Gucci: Result of new information.

Todd Gucci: Otherwise.

Todd Gucci: Additionally, today's remarks will include a discussion of certain financial measures.

Todd Gucci: Presented in conformity with U S generally accepted accounting principles for gas.

Todd Cucci: When we refer to free cash flow during today's call, we mean adjusted EBITDA, less capital expenditures as defined in our rationale. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.com. During today's call, whenever we refer to our results on an adjusted basis, we are excluding certain non-core assets we divested in the second quarter of 2022, which exclusively provided business services. Joining me on today's call is our president and CEO, Julie Laulis. With that, let me turn the call over to Julie.

Todd Gucci: Free cash flow during today's call.

Todd Gucci: EBITDA travel expenditures that are defined.

Todd Gucci: Reasons.

Todd Gucci: Reconciliations of non-GAAP financial measures discussed upon this call to the most directly comparable GAAP measures can be found memories release.

Todd Gucci: Our website it by our cable one dot net.

Todd Gucci: Today's call whenever we refer to a result unadjusted basis.

Todd Gucci: Certain non core assets.

Todd Gucci: The second quarter of 2022.

Todd Gucci: Exclusively provided business services.

Todd Gucci: Today's calls our president and CEO, Julie laws with that let me turn the call over to Julie.

Julia M. Laulis: Thank you, Todd, and good afternoon, everyone. We appreciate you joining us for today's call. With nearly a decade under our belt as a public company, I'd like to start off today's call with a brief reflection on our contrarian roots and how I believe they contribute to our success today and into the future. We have always been a different kind of operator.

Julia M. Laulis: Thank you.

Julia M. Laulis: Good afternoon, everyone. We appreciate you joining us for today's call.

Speaker Change: With nearly a decade under about as a public company.

Julia M. Laulis: I'd like to start off today's call with a brief reflection on a contrarian ribs, and how I believe they contribute to our success today.

Julia M. Laulis: For the future.

Julia M. Laulis: We have always been a different kind of operator.

Julia M. Laulis: Our safe harbor strategy that concentrated on small cities and large towns, early pivot away from video to broadband, and focus on attractive rural broadband acquisitions are just a few examples of how we have set ourselves apart from other providers in the past. Today, we continue to lean into those contrarian routes, leveraging our differences, and evolving for the future. We have a plan to achieve balanced growth over time, a robust infrastructure to support customers' increasing needs for bandwidth, in a diversified rural footprint where our local operations and the neighborly experience we provide are a meaningful differentiator. We believe this combination will continue to drive high margins and generate significant free cash. In the fourth quarter of 2023, Cable ONE was among the few operators who grew customers, expanding its residential broadband base by more than 1,600 customers.

Julia M. Laulis: Strategy concentrated on small cities and large town.

Julia M. Laulis: Early pivot away from video to broadband.

Julia M. Laulis: Focus on attractive.

Julia M. Laulis: Broadband acquisition.

Julia M. Laulis: A few examples of how we have set ourselves apart from other providers in the past.

Julia M. Laulis: Today, we continue to lean into this contrarian.

Julia M. Laulis: Leveraging our differences and evolving for the future.

Julia M. Laulis: A plan to achieve balance.

Julia M. Laulis: A robot.

Julia M. Laulis: Infrastructure to support customers increasing needs for bandwidth.

Julia M. Laulis: Diversified rural footprint.

Julia M. Laulis: Co operation and a neighborly.

Julia M. Laulis: Experience, we provide is a meaningful.

Julia M. Laulis: <unk>.

Julia M. Laulis: I believe this combination will continue to drive high margin.

Julia M. Laulis: Significant free cash flow.

Julia M. Laulis: And the fourth quarter of 20 twenty-three cable line with among the few operator, sukru customers expanding our residential broadband pays more than 1600 customers.

Julia M. Laulis: Notably, this growth was driven by both an improvement in new connects year-over-year and a sustained load churn rate. We have re-engineered our go-to-market approach to strategically target new customer segments with attractive pricing and product offerings, deploy countermeasures to address competition, and expand our network. We believe these changes to our tactical plan drove our results.

Julia M. Laulis: <unk>.

Julia M. Laulis: Growth was driven by both an improvement and new connects year over year and sustained load termites.

Julia M. Laulis: We have re engineered or go to market approach to strategically target new customer segments with attractive pricing and product offerings deploy countermeasures to address competition and expand our network.

Julia M. Laulis: These changes to our tactical plan drove results.

Julia M. Laulis: This customer growth momentum began at the end of the third quarter, persisted throughout the fourth, and continues to date. Similarly, our unconsolidated investments continue to show strong customer and financial growth. While we are focused on increasing our residential market share, we also understand the importance of achieving balanced growth over time.

Julia M. Laulis: Customer growth momentum began at the end of the third quarter.

Julia M. Laulis: Persisted throughout the fourth and continues to date.

Julia M. Laulis: Similarly.

Julia M. Laulis: <unk> investments continued to show strong customer and financial growth.

Julia M. Laulis: While we are focused on increasing a residential market share. We also understand the importance of achieving balance over time.

Julia M. Laulis: Our ultimate financial objective remains to consistently generate significant free cash flow for our investors, something we accomplished again in 2023, reaching yet another all-time high for full-year adjusted EBITDA and less capital expenditures with a 9.7% growth year-over-year. This underscores our ability to perform financially, even amid challenging market conditions. We generated this free cash flow while continuing to invest in our already robust network, ensuring we remain ahead of the consumption curve. For example, nearly a quarter of our residential internet customers now use more than a terabyte of data per month, a 17% increase over the same period last year. We have managed this surge effectively, as overall network utilization during peak hours remained at approximately 20% for both downstream and upstream traffic.

Julia M. Laulis: Ultimate financial objective remains to consistently generate significant free cash flow.

Julia M. Laulis: <unk> something we accomplished again in 2023, reaching yet another all time high for full year, adjusted EBITDA less capital expenditures with a 9.7% growth year over year.

Julia M. Laulis: This underscores our ability to perform financially.

Julia M. Laulis: Even amid challenging market conditions.

Julia M. Laulis: We generated this free cash flow, while continuing to invest in our already robust network insuring remain.

Julia M. Laulis: A V consumption.

Julia M. Laulis: Nearly a quarter of a residential internet customers now use more than a terabyte of data per month is 17% increase over the same period last year.

Julia M. Laulis: Manage this surge effectively.

Julia M. Laulis: Overall network utilization during peak hours.

Julia M. Laulis: At approximately 20% for both downstream and upstream traffic.

Julia M. Laulis: Given this available capacity, we are well positioned to moderate our capital spending in support of our efforts to sustain a trajectory of continued free cash flow growth over the long term. As always, we remain steadfast in our commitment to maintain a network so robust that our customers never second-guess the reliability of their service. Beginning in the fourth quarter, we increased efforts to broaden our reach by marketing to value-conscious customers in ways we haven't previously emphasized. We also introduced value-added benefits, such as free unlimited data, to retain the customers we have served exceptionally well for a decade, and we have surgically implemented changes to our pricing and packaging to broaden our appeal among new and existing customers. Although we face some wire competition, we anticipate that our footprint will remain relatively less competitive than urban markets, providing meaningful opportunities for increasing penetration.

Julia M. Laulis: Given this available capacity, we are well positioned to moderator capital spending.

Julia M. Laulis: Sort of our efforts to sustain the trajectory of continued free cash flow growth over the long term.

Speaker Change: As always.

Julia M. Laulis: Remain steadfast in our commitment to maintain a network so robust that our customers never second guessed.

Julia M. Laulis: Liability.

Julia M. Laulis: Their service.

Julia M. Laulis: Beginning in the fourth quarter, we increased efforts to reach by marketing to value conscious customers in ways. We haven't previously emphasized we also introduced value added benefits such as free unlimited data to retain the customers, we observed exceptionally well per decade.

Julia M. Laulis: And we have surgically implemented changes for pricing and packaging to broaden our appeal among new and existing customers.

Julia M. Laulis: We are pleased with the early results we are seeing.

Julia M. Laulis: We'll continue making significant investments in our marketing and branding strategies.

Speaker Change: Sure a message reach a wide audience.

Speaker Change: Although we face.

Speaker Change: We anticipate that our footprint will remain relatively less competitive urban markets, providing meaningful opportunities for increasing penetration.

Julia M. Laulis: However, when a new provider prepares to enter one of our markets, we are ready to respond aggressively with a comprehensive and multi-dimensional playbook. In targeted situations, we will also compete more aggressively on price. We have a clear understanding of the capital constraints and the return dynamics faced by new entrants to our markets, especially during times of heightened capital and construction costs. We believe that these dynamics, coupled with our responses, have already caused potential newcomers to rethink their entry into some of our markets. In terms of wireless competitors, it bears repeating that we believe Cable ONE offers a superior service, and our new value-based offers go head-to-head on price. Fixed wireless is known to have capacity limitations, with recent reports indicating usage limits and potential throttling.

Speaker Change: However, when a new provider prepares to enter one of our markets. We are ready to respond aggressively with a comprehensive and multi dimensional playbook.

Speaker Change: Situations, we will also compete more aggressively on price.

Speaker Change: Have a clear understanding of the capital constraints.

Speaker Change: Return dynamics faced by new entrants to our market, especially during times of heightened capital in construction costs.

Speaker Change: We believe that these dynamics, coupled with our responses have already cause potential newcomers to rethink their entry into some of our markets.

Speaker Change: In terms of wireless competitors embarrassed repeating that we believe Cableone offers a superior service.

Speaker Change: Our new value based offers go head to head on price.

Speaker Change: Wireless is known to have capacity limitation with recent reports, indicating usage limits and potential throttling.

Julia M. Laulis: In contrast, our network effortlessly accommodates customers with high data usage needs. It's worth noting that across our footprint, our new customer offers include unlimited data, underscoring our ongoing commitment to listening to our customers and prioritizing their needs with the services we provide. Our efforts to strategically target value-conscious customers and fiercely compete where necessary resulted in downward pressure on ARPU for our residential data customers during the fourth quarter. We anticipated this and expect that we can continue to effectively manage ARPU going forward as we fine-tune our tactics to achieve balanced growth over time. Although targeting the value segment is expected to pressure ARPU in the near-term, we view this as an acceptable trade-off for defending our markets, expanding our customer base, and enhancing long-term value. As I said earlier, we understand that achieving balanced growth is essential for our long-term success, and we believe we are currently taking the necessary steps to achieve that. Ultimately, our philosophy aligns with the wisdom of the late, great Charlie Munger, who consistently sought partnerships with companies that, quote, generate substantial cash flow. end quote.

Speaker Change: Contrast.

Speaker Change: Effortlessly accommodate customers with high data usage needs.

Speaker Change: It's worth noting down across our footprint our new customer offers include unlimited data underscoring our ongoing commitment to listening to our customers and prioritizing their needs with the services we provide.

Speaker Change: Our efforts to strategically target value conscious customers and fiercely compete where necessary resulted in downward pressure on <unk>.

Speaker Change: <unk> data customers during the fourth quarter.

Speaker Change: Anticipated this and expect that we can continue to effectively manage.

Speaker Change: Forward as we fine tune our tactics to achieve balanced growth.

Speaker Change: Although targeting the value segment is expected to pressure or boo in the near term. We view this as an acceptable tradeoff for defending our markets expanding our customer base and enhancing longterm value.

Speaker Change: As I said earlier, we understand that achieving balance frozen is essential for our long term success.

Speaker Change: Believe we are currently taking the necessary steps to achieve.

Speaker Change: Ultimately or <unk>.

Speaker Change: Philosophy of lines with the wisdom of the late great Charlie Munger to consistently sought partnerships with companies that quote.

Speaker Change: Substantial cash flow and quote.

Julia M. Laulis: In 2023, despite competitive and economic challenges, we achieved our highest level of free cash flow ever. With our focus on subscriber growth in 2024 and discipline over operational and capital expenditures, we are poised to continue growing free cash flow over time. Before I turn it over to Todd, I want to emphasize that the heart of our operation is a personal approach to service delivery.

Speaker Change: In 2023.

Speaker Change: <unk> competitive and economic challenges.

Speaker Change: Cheaped, our highest level of free cash flow ever.

Speaker Change: With our focus on subscriber growth in 2024 and discipline over operational and capital expenditures.

Speaker Change: To continue growing free cash flow over time.

Speaker Change: Before I turn it over to Todd I want to emphasize that the heart of our operation personal approach to service delivery.

Julia M. Laulis: This is another differentiated aspect of our business model. It is rooted in the fact that a majority of our associates and a substantial number of leaders are integral members of the communities in which they live and work. Our customers are their friends and family. Their loyalty and trust matter to RS&T. I recently heard a story from one of our systems that beautifully illustrates this commitment. One of our hardware technicians was on a service call to troubleshoot a video problem for an elderly customer. As it turned out, it wasn't an issue with our video service; the customer's TV was broken.

Todd Gucci: This is another differentiated aspect of our business model.

Todd Gucci: It is rooted in the fact that a majority of our associates.

Speaker Change: A number of leaders are integral members of the communities in which they live and work.

Todd Gucci: Customers are their friends and family.

Speaker Change: Their loyalty and trust matters to our associates.

Speaker Change: I recently heard a story from one of our system the beautifully illustrates this.

Speaker Change: <unk>.

Speaker Change: One of our Hargrave technicians was on a service called to Troubleshoot, a video problem for an elderly customer.

Speaker Change: As it turned out it wasn't an issue with Arab video service the customers T V was broken.

Todd Cucci: Recognizing the customer was not in a financial position to purchase a new one, the technician, unbeknownst to anyone, purchased a brand new TV out of his own pocket, delivered it, and set it up for the customer. I could share dozens of similar examples, but I'll simply reiterate our people truly are the backbone of our company and our success, and now Todd, who will provide a full recap of our fourth quarter and full year financial performance. Thanks, Julie. Before discussing our 2023 full-year results, I'd like to start by touching on some of the key quarterly figures from our fourth quarter financial results. For the fourth quarter of 2023, our total revenues were $411.8 million, a 3.2% decrease from the fourth quarter of 2022, driven by a 21.3% decrease in residential video revenue.

Speaker Change: Recognizing the customer was not in a financial position to purchase a new one.

Speaker Change: The technician Unbeknownst to anyone purchased a brand new T V out of his own pocket delivered it and set it up for this customer.

Speaker Change: I could share dozens of similar examples, but I'll simply reiterate our people truly are the backbone of our company and our success.

Speaker Change: And now Todd to provide a full recap.

Todd Gucci: <unk> and pull your financial performance.

Todd Gucci: Thanks Julie.

Todd Gucci: Discussing their of 2023 40 results I'd like to start by touching on some of it.

Todd Gucci: Figures from the fourth quarter for me to choose.

Todd Gucci: For the fourth quarter of 2023, or total revenues were $411 million, 3.2% decrease from the fourth quarter of 2022.

Todd Gucci: 21.3 per cent decrease in residential video revenues.

Todd Cucci: Residential data revenues, however, increased 2.1% year over year, with PSUs growing more than 1,600 during the fourth quarter. However, business services revenues declined 0.5% year-over-year, whereas data services revenue within the business services offerings exceeded the comparable residential data revenue growth. Net income was $115.3 million for Q4 2023 compared to a net loss of $77.2 million in Q4 2022; adjusted EVADA was $226.9 million, a decrease of 2.7% when compared to 2023, as revenue gains and data services were outpaced by revenue attrition rates in the video product. The Adjusted EBITDA margin expanded 30 basis points to 55.1% year over year. Capital expenditures totaled $115.6 million in Q4.

Todd Gucci: Residential data revenues, however, increased 2.1% year over year with psus growing more than 1600 during the fourth quarter.

Todd Gucci: Business services revenues decline.

Todd Gucci: Coin 0.5 per cent your ear.

Todd Gucci: Data services revenue within the business services offerings.

Todd Gucci: The comparable residential data revenue growth rates.

Todd Gucci: Net income was 115.3 million dollar for Q4 2023 compared to a net loss of $77.2 billion in Q4 of 2022.

Todd Gucci: Adjusted EBITDA was $226.9 million.

Todd Gucci: 2.7%.

Todd Gucci: 2023.

Todd Gucci: James and data services.

Speaker Change: Oh, please by revenue attrition rates in the video Crawford.

Speaker Change: EBITDA Morgan experience 30 basis points.

Speaker Change: 55.1%.

Todd Gucci: <unk>.

Todd Gucci: Capital expenditures totaled $115.6 million in Q4.

Todd Cucci: During the quarter, we invested $21.9 million in CADBX for new market expansion and $9.4 million for integration. Our fourth-quarter capital expenditures were elevated due to the timing of strategic projects with the completion of several large initiatives and the launch of new ones. We also capitalize on opportunities to secure discounted equipment for future network expansion, particularly for enhanced ATAM projects backed by 15 years of government funding. Additionally, we accelerated the deployment of our Wall-to-Wall Wi-Fi product, which has significantly enhanced the customer experience and bolstered retention rates. These investments reflect our commitment to long-term growth and operational equity. Adjusted EBITDA lost capital expenditure decreased from $126.4 million in the fourth quarter of 2022 to $111.3 million in the fourth quarter of 2023. This decrease is primarily driven by the higher capital expenditures incurred in the fourth quarter of 2023, as previously mentioned, now turning for a full year result.

Todd Gucci: During the quarter reinvest at $21.9 million or 10 Bucks for a new market expansion.

Todd Gucci: $9.4 million immigration activities.

Todd Gucci: Fourth quarter capital expenditures were elevated digit tiny of strategic projects with the completion of several large initiatives.

Todd Gucci: And some new ones.

Todd Gucci: We also capitalize on opportunities.

Todd Gucci: <unk> equipment for future memory expansion, particularly for enhanced became projects.

Todd Gucci: 15 years of government funding.

Todd Gucci: Additionally, we accelerate the deployment of our wall.

Todd Gucci: Wifi products, which is significantly enhanced the customer experience and bolster retention rates.

Todd Gucci: <unk> reflect our commitment to long term place and operational excellence.

Todd Gucci: Capital expenditures decreased from $126.4 million in the fourth quarter of 2022, two $111.3 million in the fourth quarter of 2023.

Todd Gucci: This decreases primarily driven by the higher capital expenditures incurred in the fourth quarter of 2023.

Todd Gucci: We mentioned.

Todd Gucci: Now turning to our full year results.

Todd Cucci: Starting off with revenue, total revenues for 2023 were approximately $1.7 billion, a decrease of $28 million, or 1.6% from 2022. On an adjusted basis, after taking into account the divestiture of certain non-core assets in the second quarter of 2022, total revenues declined 1.4%. The decrease was driven largely by the continued decline in revenues from our lower-margin, de-emphasized residential and business video product lines, including a $67.2 million decrease in residential video revenue.

Todd Gucci: Very awful revenue total revenues were 2023.

Todd Gucci: Proximately $1.7 billion, a decrease of $28 million or 1.6% from 2023.

Todd Gucci: Justin basis after taking into account the best picture of certain non core assets from the second quarter of 2022 total revenues declined 1.4%.

Todd Gucci: The decrease was driven largely by the continued decline in revenues from our lower margin.

Todd Gucci: Size residential and business video product lines, including a $67.2 million decrease in residential video revenues.

Todd Cucci: The growth of our most profitable residential and commercial broadband product lines continues to drive our business, as the demand for reliable high-speed broadband expands across all customer groups. So does confidence in our continued success and ability to strike the right long-term balance between subscriber growth and our. For 2023, our residential data revenues grew by $44.7 million, or 4.8% when compared to 2022. Year over year, business services revenues declined 0.2% but grew approximately 1% on an adjusted basis. And, as mentioned earlier, data services within our business services offerings experienced healthy growth during the year. Operating expenses were $440.9 million or 26.3% of revenues in 2023 compared to $470.9 million or 27.6% of revenues in the prior year. A 130 basis point increase, driven largely by a $49.9 million decrease in video programming costs.

Todd Gucci: The growth of our most profitable residential and commercial Broadway and product lines continues to drive our business.

Todd Gucci: As the demand for reliable high speed broadband expands across all customer.

Todd Gucci: So does the confidence in our between success and ability to strike the right long term.

Todd Gucci: Balance between subscriber growth and <unk>.

Todd Gucci: For 2023, Ah residential data revenues grew by $44.7 million or 4.8% when compared to 2022.

Todd Gucci: Year over year business services revenues to coin, 0.2%, but grew approximately 1% on adjusted basis.

Todd Gucci: And as mentioned earlier data services within our business services offerings experience healthy growth during the year.

Todd Gucci: Operating expenses were $440.9 million or 26.3 per cent of revenues and 2023 compared to $470.9 million.

Todd Gucci: 27.6% of revenues.

Todd Gucci: Fire, you, a 130 basis point improvement.

Todd Gucci: Largely by a 49.9 million dollar decrease in video programming costs.

Todd Cucci: Our focus on innovation and investment has led to significant efficiency gains, including a 25% decrease in average monthly truck rolls per 1,000 customers and a 16% drop in contacts per customer since 2020. These advancements, along with our disciplined approach to cost management, demonstrate our proactive strategy in aligning with decreasing video revenue. Selling general and administrative expenses were $354.7 million for 2023 compared to $350.3 million in the prior year.

Todd Gucci: Our focus on innovation and investment has led to significant efficiency games, including a 25 per cent decrease in average monthly truck rules per thousand customers and.

Todd Gucci: And a 16% drop in contacts per customer.

Todd Gucci: 2020.

Todd Gucci: <unk>, along with our disciplined approach to cost management.

Todd Gucci: Radar proactive strategy.

Todd Gucci: Decreasing video revenues.

Todd Gucci: Selling general and administrative expenses were $354.7 million with 2023, compared with $350.3 million in the prior year.

Todd Cucci: SG&A as a percentage of revenue was 21.1% for 2023 compared to 20.5% for 2022, with the increase driven by marketing and branding initiatives, higher labor costs, and meaningful investments that we are making in software and service platforms. These are driving ongoing digital transformation initiatives in the areas of enhanced customer and associate experience. Suggested EBITDA is $916.9 million for 2023 compared to $911.9 million for 2022, an increase of 0.6%.

Todd Gucci: SG&A as a percentage of revenue was 21.1% for 2023 compared with 25 per cent for 2022 with the increase driven by marketing and branding initiatives higher labor costs.

Todd Gucci: For investments that we're making software and service platforms.

Todd Gucci: These are driving ongoing digital transformation initiatives areas or enhance customer and associate experience.

Todd Gucci: Adjusted EBITDA was 916.9 million dollar for 2023, and 3900 $11.9 million for 2022, an increase of 0.6%.

Todd Cucci: Our adjusted EBITDA margin for 2023 was 54.6%, representing a 120 basis point improvement compared to the prior year. Capital expenditure totaled $371 million for 2023, which equates to 40.5% of adjusted EBITDA compared to $414 million and 45.4% in the prior year. Our capital expenditures have trended downward over the past two years, thanks to the meaningful investments we've already made in our network, specifically with the DOCSIS 4.0 network architecture. The significant excess capacity generated by these investments provides us with the confidence to manage our total capital expenditures towards the low $300s for 2024. Adjusted EBITDA capital expenditures were $545.9 million in 2023 compared to $497.8 million for the prior year, a nearly 10% increase.

Todd Gucci: Jassid EBITDA margin for 2023, with 54.6%, representing a 120 basis point improvement compared to the prior year.

Todd Gucci: Capital expenditures totaled $371 million for 2023, which equates to 40.5% of adjusted EBITDA compared to $414 million and 45.4%.

Todd Gucci: Prior year.

Todd Gucci: Capital expenditures have tried it downward over the past two years.

Todd Gucci: With a meaningful investments we've already made in our network.

Todd Gucci: Perfectly with the doctors for Dot O network architecture.

Todd Gucci: The significant excess capacity generated by these investments provides us with the confidence to manage our total capital expenditures towards the low 300 for 2024.

Todd Gucci: Okay.

Todd Gucci: Adjusted EBITDA was capital expenditures was $545.9 million for 2023 compared to $497.8 million for the prior year.

Todd Gucci: Nearly 10% increase.

Todd Cucci: We will continue to evaluate the application of the meaningful cash flow that this business generates and stay rooted in our philosophy of long-term-oriented investments and conservative balance sheet management. We will remain balanced across network investment. Digitally oriented platform investments, organic and inorganic growth opportunities, and continue a diversified return on capital strategy consisting of disciplined debt repayment, consistent dividends, and opportunistic share repurchase. In 2023, we distributed $66.3 million in dividends to shareholders, bought back over 141,000 shares for $99.6 million, and repaid $163.7 million of debt, of which $150 million represented volunteer repayments of our outstanding revolver As of December 31st, we had approximately $190 million of cash and cash equivalents on hand. Our debt balance was approximately $3.7 billion, consisting of approximately $1.8 billion in term loans and $920 million in convertible notes.

Todd Gucci: Continue to evaluate the application of the meaningful cash flows.

Todd Gucci: Business generates and stay rooted in our philosophy of longterm oriented investments and conservative balance sheet management.

Todd Gucci: We will remain balanced across network investments digitally oriented platform investments.

Todd Gucci: Ganic, an inorganic growth opportunities.

Todd Gucci: And continue a diversified return capital strategy, consisting of discipline debt repayment consistent dividends and opportunistic share repurchases.

Todd Gucci: In 2023, we distributed $66.3 million in dividends to shareholders, Bob back over 141000 shares for $99.6 million and repaid $163.7 million of debt.

Todd Gucci: 150 million represent volunteer repayments of our outstanding revolver balance.

Todd Gucci: As of December 31st we had approximately $190 million of cash and cash equivalents on here.

Todd Gucci: Or that balance is approximately $3.7 billion, consisting of approximately 1.8 billion intermodal is $920 million convertible notes.

Todd Cucci: $650 million in unsecured notes, $338 million of revolver borrowings, and $5 million of finance lease liability. We also had $662 million available for additional borrowings under our $1 billion Committed Revolving Credit Fund. Earlier this week, we repaid an additional $50 million of Revolver borrowings, further reducing our go-forward debt service costs, our floating rate debt balance, and expanding our unfunded committing Revolving credit capacity. Our weighted average cost of debt for 2023 was 4.22%. Our net leverage ratio on a last quarter annualized basis was 3.85 times, and the vast majority of our borrowings are your fixed issuance or have been synthetically fixed under long-term contracts. Considerably mitigating our exposure to the prevailing rate of virus.

Todd Gucci: Hundred and 50 million, an unsecured knows 300 is $38 million, a revolver borrowings and $5 million.

Todd Gucci: Those.

Todd Gucci: We also had $662 million available for additional borrowings under a 1 billion dollar submitted revolving credit facility.

Todd Gucci: Earlier. This week, we were paid an additional $50 million a revolver borrowings further reducing our bill for that service cost.

Todd Gucci: Floating rate that balance and expanding our unfunded committing revolving credit capacity.

Todd Gucci: A weighted average cost of depth 2023 was 4.22 per cent.

Todd Gucci: Net leverage ratio on a last quarter annualized basis was 3.85 times.

Todd Gucci: Majority of our borrowings or your fixed issuance.

Todd Gucci: Medically fixed under longterm contracts considerably mitigating or exposure to the prevailing rate environment.

Todd Cucci: Additionally, the nearest final maturity for any of our VET instruments does not occur until 2020. In addition to the other investment activity previously discussed during the year, during the fourth quarter, we invested the remaining $13.9 million under our subscription agreement with ZipliFiber, bringing our total investment in this growing fiber provider to $50 million. Looking at our unconsolidated investments, in total, residential and business data customers grew by approximately 9,800, or 1.2% on a sequential basis in the fourth quarter, and more than 83,600 customers for the full year 2020. This does not include the operations of Metrolinx, where we have a less significant investment. The ongoing expansion of these businesses reinforces our enduring strategy of collaborating with experienced management teams and partnering with the most reputable financial agencies in the sector. Before we turn to Q&A, I'd like to address the Affordable Connectivity Program, also referred to as ACP, for our broadband customers. While it is still possible Congress might provide funding to continue the program, we are prepared for the likelihood that funding for the program will be depleted by April.

Todd Gucci: Additionally, the nearest final maturity for any.

Todd Gucci: Van instruments.

Todd Gucci: Until 2026.

Todd Gucci: In addition to the other investment activity previously discussed during the year during the fourth quarter reinvested the remaining $13.9 million under our subscription agreement with simply fiber.

Todd Gucci: Our total investment in this growing fiber provider.

Todd Gucci: $50 million.

Todd Gucci: Looking at our Unconcern investments in total residential and business day to customers grew by approximately 9800 or 1.2% sequential basis in the fourth quarter and more than 83600 customers for the full year 2023.

Todd Gucci: This does not include the operations of Metro that where we have a less significant investments.

Todd Gucci: The ongoing expansion of these businesses reinforces our enduring strategy collaborated with experienced management teams.

Todd Gucci: <unk> with the most reputable financial disease in the sector.

Speaker Change: Before we turn the Q&A I'd like to address the affordable connectivity program also referred to as a C. P for a broadband customers.

Speaker Change: While it is still possible Congress might provide funding to continue the program. We are prepared for the likelihood that funding for the program will be depleted by April.

Todd Cucci: We've initiated communications and are taking proactive steps to prepare for the potential impact on our approximately 50,000 ACP subscribers. It is important to note that less than 20% of these customers have a plan fully funded by the ACP. While our other ACP customers are subscribers who pay for a portion of their current plan, we understand that the end of the program could be disruptive for many. However, we've carefully mapped out the most appropriate landing spots based on our customers' financial and usage needs, and we are committed to ensuring the smoothest possible transition. Additionally, we see this as a potential opportunity to gain new customers as the lapse in funding might prompt those not satisfied with their existing provider to explore alternative internet service providers. With that, we are now ready for questions. Thank you. The floor is now open for your questions.

Speaker Change: We've initiated communications and are taking proactive steps to prepare for the potential impact on our approximately 50000 a C P subscribers.

Speaker Change: It is important to note that less than 20 per cent of abuse customers have a plan fully funded by the a C. P.

Speaker Change: While our other ACP customers are subscribers, who pay for a portion of your current plan we.

Speaker Change: We understand that the end of the program could be disrupted for many however, we have carefully mapped out the most appropriate landing places based on our customers financial and usage needs and we are committed to ensuring the smooth as possible transition.

Speaker Change: Additionally, we see this as a potential opportunity to gain new customers at the laughs and funding might prompt there was not satisfied with your existing provider.

Speaker Change: Floor alternate Internet service providers.

Speaker Change: With that we are now ready for questions.

Speaker Change: Yeah.

Speaker Change: Now open for your questions to ask a question. This time. Please press bar then the number one on your telephone keypad.

Nick Aluru: To ask a question this time, please press star, then the number 1 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 Nick Aluru with JP Morgan. Hey, good afternoon.

Speaker Change: Plus for just a moment to compile the queue any roster.

Speaker Change: Your first question comes from the line of <unk> J P. Morgan Your line is open.

Julia M. Laulis: Thanks for taking the question. First, on the broadband ARPU deceleration, thanks for the discussion on the low-end offers pressuring ARPU here, but I'm curious what the impact may have been from the existing sub-base, like the retention offers you mentioned, or if there's been any down-tiering or anything that you've noticed. And then second, Todd, on the balance sheet, you mentioned net leverage at 3.85 times now. How do you view the target leverage for the company here? And then, as we look out two years, given potential funding for MBI and having to take on that balance sheet, how do you think about how MBI could impact your target leverage range? Thanks. I'll start out, Nick. It's Julie.

Speaker Change: Hey, good afternoon. Thanks for taking my question first on the broadband or food deceleration. Thanks for the discussion on the low end offers pressuring or poo here, but I'm curious what the impact may have been from the existing service like the retention offers you mentioned or if there's been any down tearing or anything that you've noticed and then second.

Speaker Change: On the balance sheet, you mentioned that leverage at 3.85 times now how do you view the target leverage for the company here and then as we look out two years given potential funding for M. B I and having to take on that balance sheet. How do you think about how M b I could impact or target <unk>. Thanks.

Speaker Change: I'll start out and it gets Julie Uhm. So yes, we have had some we've been more willing to do promotional discount it offers.

Julia M. Laulis: So, yes, we have had some; we've been more willing to do promotional and discounted offers, especially targeted at the value conscious segment. And that is a change or an evolution from our past, where we were more specifically concentrating on the higher end LTV customers. We've also done some pricing and packaging changes and some, what I would call, pretty strong competitive response actions in just a few markets, and we've seen really good results from that. What do I call good results?

Speaker Change: Especially targeted at the value conscious segment and that is a change or an evolution from our parents are you more specifically concentrating on the higher end L. T V customers. We've also done some pricing and packaging changes and some.

Speaker Change: What I would call pretty strong competitive response.

Speaker Change: Actions and just a few markets and we've seen really good results.

Speaker Change: <unk>, what do I call good results swell I'd say, yes.

Julia M. Laulis: Well, I'd say if an overbuilder pulls a contractor, that's a good result. If an overbuilder stops building in our area, that's a good result. If we are actually growing in that hyper-competitive market, that's a good result. And those are all things that we have seen from that type of response.

Speaker Change: And over Belder pulls a contractor that's a good result.

Speaker Change: <unk> stops building and.

Speaker Change: That's a good result, if we are actually growing in that hyper competitive market.

Speaker Change: Good results and those are all things that we have seen from that type of response in terms of cannibalization. If I look at something as simple as stolen about 80 per cent of our new customers are coming in at about 300, Meg level or a Bob.

Todd Cucci: In terms of cannibalization, if I look at something as simple as sell-in, about 80% of our new customers are coming in at the 300 meg level or above. So, I still think we're doing well in the majority of our markets, but we have taken some strong responses to ensure that we are defending our marketplace and growing our data penetration rate. And then, Nick, and Todd, on the balance sheet side of the equation, because I think Julie nailed most of the key points on RPU. As you know, Cable ONE has always maintained a philosophy of a very conservative balance sheet. We don't have a target leverage profile per se, but we've operated the business throughout various economic environments in that kind of two and a half to four and a half times leverage range.

Speaker Change: So I I still think.

Speaker Change: Well and the majority of our markets, but we have taken some strong responses to ensure that we are defending our marketplace and growing our data penetration rates.

Speaker Change: And then next taught on the balance sheet side of the equation at G mail the most.

Speaker Change: He points on <unk>.

Speaker Change: Table, one has always maintained a philosophy of.

Speaker Change: Oh very conservative balance sheet, we don't have a target leverage profile per se, but we've operated the business.

Speaker Change: Various economic environment.

Speaker Change: Two and a half to four and a half times leverage range, we were comfortable taking.

Todd Cucci: We were comfortable taking the leverage up to that four and a half or near that with the heart rate transaction. We also were issuing capital at near a zero percent interest rate. So it's not only just about the multiple, but it's also the cost of capital that we view as an important factor in managing that balance sheet. The three eight five that we're at right now, as you can see from the discipline repayment that we've been enacting here in the last few quarters and will continue as we're moving that debt balance down. That reduces our highest tranche of capital, which is our floating rate debt under the revolver. It also enhances our unfunded committed revolving capacity under that billion dollar committed revolver that we extended earlier last year with a syndicate of our relationship banks.

Speaker Change: The leverage up to that four and a half or near that with the heart rate transaction. We also issuing capital Z.

Speaker Change: Zero percent interest rate. So it's not only just about the multiple but it's also the cost of capital that will be with an important factor in.

Speaker Change: Managing that balance sheet, the 385 that we're at right now.

Speaker Change: As you can see from the discipline repayment that we've been.

Speaker Change: And I came here in the last few quarters and will continue as we're moving that balance.

Speaker Change: Balance down.

Speaker Change: Reduces our highest tranche of capital, which is our floating right that under the revolver.

Speaker Change: It also enhances our unfunded committed revolving capacity under that billion dollar committed revolver that we extended earlier last year.

Speaker Change: With a syndicate of our relationship banks and all of that was very intentional as we think out to your other question.

Todd Cucci: And all of that was very intentional as we think out to your other question of the prospects of preparing that balance sheet for events like an MBI. And we feel like that transaction and the timing associated with that transaction will align with that leverage range that I outlined previously to you. Yes, understood. Thank you both.

Speaker Change: The prospects of preparing that balance sheet bore events.

Speaker Change: And N B, I, and we feel like that transaction and.

Speaker Change: The timing associated with that transaction will align with that that leverage range that I outline.

Speaker Change: Previous it to you.

Speaker Change: Yep understood. Thank you both.

Craig Eder Moffett: You bet. Our next question comes from the line of Craig Williams with TD Cohen. Your line is open.

Speaker Change: You bet.

Speaker Change: Our next question comes from the line of Greg Williams with T. D. Cohen Your line is open.

Julia M. Laulis: Julie, you mentioned the need for balanced growth, and you'll see some pressures on ARPU in the near term. And yes, it could be an acceptable tradeoff. But what does "near term" mean? How should we think about the ARPU pressures over the next few quarters and through the year as you sort of target the low end and play some defense?

Greg Williams: Great. Thanks for taking my questions Uhm, Julie you mentioned.

Speaker Change: The need for balanced growth.

Speaker Change: And you'll see some pressures on our poo in the near term.

Greg Williams: Yes, it could be acceptable tradeoff I'm just wondering what is near term mean, how do we think about the pressures over the next few quarters.

Speaker Change: And through the year as you said.

Speaker Change: Target the low end and Pleasant defense.

Julia M. Laulis: And also, just a second question is buybacks do seem to be on the back burner. Todd just mentioned shoring up the balance sheet. So is it sort of safe to figure while the stock's down at these levels, the balance sheet repair is the priority here?

Speaker Change: And also the second question is.

Speaker Change: Buybacks do seem to be on the back burner.

Speaker Change: Just mentioned showing up the balance sheet. So it is it sort of safe to figure while the stocks down at the levels the balance sheet repair is prioritization here. Thanks.

Speaker Change: Great. So.

Julia M. Laulis: So, Yes, pressure in the near term. We are, you know, we've operated in these small cities, large towns. And just because we're in communities that are not urban doesn't mean that these folks are getting a substandard network. And, in fact, the opposite is true.

Speaker Change: Yes, the pressure in the near term we're.

Speaker Change: We've we've operated in these <unk>.

Speaker Change: Small cities large towns and just because her and communities that are not urban doesn't mean that these folks are getting a substandard network and in fact.

Speaker Change: The opposite is true we were one of the first operators if not the first to offer a gig service for example back in 2017, we have symmetrical multi gig service across our HFC plant other the majority of acquaintances fiber now.

Julia M. Laulis: We were one of the first operators, if not the first, to offer a gig service, for example, back in 2015. We have symmetrical multi-gig service across our HFC plant, although the majority of our plant is fiber now. And we have been operating in these markets for decades. And I give that to you, Greg, as context that we are going to defend our markets, and we are going to grow market share. So I do see some near-term pressure as we defend some markets. It's nice that we're dispersed across 24 states, remembering that our average market size is 20,000 customers. So an impact of a competitor anywhere is not an impact on us overall. But we're going to have to take you on this journey with us.

Speaker Change: And we have an operating in these markets for decades.

Speaker Change: I gave that to you Greg is contacts that we are going to depend on marquez and we are gonna grow market share.

Speaker Change: You see in near term pressure as we just spend some markets. It's nice that were dispersed across 24 states.

Speaker Change: Bring that our average market size is 20000 customers so an impact of a competitor anywhere.

Speaker Change: Impact to us overall.

Speaker Change: But we're gonna have to take you on this journey with US, we're experimenting and learning and we're being really.

Todd Cucci: We're experimenting and learning, and we're being really methodical. We're trying to be incredibly segmented in the marketplace, very targeted, so that we can balance ARPU in different types of markets overall. Over a multi-year period, I think we are going to show nice growth overall, but it is going to be a journey. As always, our focus is on taking care of our associates, our customers, and generating significant free cash flow. So I'm not overly concerned about revenue in the short term. And Greg, one thing I'll just add to that: I mean, we talk about ARPU a lot.

Speaker Change: The article we're trying to be incredibly second plan of segmenting the market place very targeted so that we can balance <unk> and different types of markets.

Speaker Change: Oh.

Speaker Change: Multiyear period, I think we're going to show nice growth overall, but it is it is going to be a journey is always our focus is on taking care of our associates our customers in generating significant free cash flow.

Speaker Change: So I'm not overly concerned about revenue in the short term.

Speaker Change: And one thing I was out on that I mean, we talked about our boo lot. It's very key factor from an economic perspective, but we have a multi dimensional playbook in terms of the behaviors.

Todd Cucci: It's a very key factor from an economic perspective, but we have a multi-dimensional playbook in terms of the behaviors at which we're both looking at customer acquisition as well as customer retention. And, you know, we're big believers in that acquisition and retention of those customers is key to our long-term value creation for our owners. And we've talked about where our penetration rates have been extensively in the past, and we feel we can continue to demonstrate to our shareholders, our associates, our communities, that we can be the leading provider in these markets and expand that penetration, and that's what we're doing. As it relates to the balance sheet, I wouldn't call it repair it, which I think was the term you used, because we've always been very balanced in how we've utilized the balance sheet, both from debt issuance and the cost and the term of that, so we feel like it's very long-term, highly fixed, and puts us in a great spot to be in a good position to grow.

Speaker Change: Which were both looking at customer acquisition as well as customer retention.

Speaker Change: Yeah, we're big believers in that.

Speaker Change: Acquisition retention of those customers is key to our longterm value creation.

Speaker Change: And we talked about where our penetration rates have been.

Speaker Change: <unk> in the past and we feel we can continue to demonstrate.

Speaker Change: To our our shareholders our associates.

Speaker Change: Communities that that we can be the leading provider in these markets and expand penetration and that's what we do is it.

Speaker Change: Relates to the balance sheet I wouldn't call. It repair. It I think was the term you used because we've always been buried balanced and how we've utilized the balance sheet.

Speaker Change: You know that issue <unk>.

Speaker Change: The cost of that so we feel like it's very longterm highly fixed and puts us in a great spot.

Speaker Change: To be in a good position to grow.

Todd Cucci: We did pull back on the buybacks in the last few quarters, but I'll remind the audience that we did issue in 2020, we issued equity, and we bought back almost 150% of the number of shares that we issued in 2020 at a nearly 50% discount to the price that we issued at. And as we think about investing in ourselves, it's always investing in the network, investing in our people, and investing in ourselves in many cases through the buyback of shares. But we also very much believe in the return of capital to shareholders, and running a long-term business is the discipline around borrowing and repaying that.

Speaker Change: We did pull back from the buybacks.

Speaker Change: Last few quarters, you saw a remind the audience that we did issue and 2020th we issued equity.

Speaker Change: And we bought back almost 150% of the number of shares that we issued in 2020 at a nearly 50 per cent discount to the price that we issued apps and I'll be thinking about investing in ourselves, it's always investing in the network investing in our people.

Speaker Change: <unk> you know ourselves in many cases through the buyback of chairs, but we also very much do believe in the return of capital to shareholders and running a longterm business is the discipline.

Speaker Change: Borrowing and repaying desk, and that's credibility with our credit or partners and I think that's credibility with our our shareholders as well.

Frank G. Louthan: And that's credibility with our creditor partners, and I think that's credibility with our shareholders as well. So we will be maintaining a balance there. But as we prepare the balance sheet for future events and want to continue to maintain that conservative philosophy, you will see us be a little bit more focused on debt repayment. We're not big believers in the perpetually leveraged business model. Got it, understood. Thank you. The next question comes from the line of Frank Louthan with Raymond James. Your line is open.

Speaker Change: So we will be you know maintaining a balance there, but as we prepare the balance sheet for future events.

Speaker Change: And want to continue to maintain that conservative philosophy, you will see is be a little bit.

Speaker Change: More focused on debt repayment, we're not big believers in the perpetually leveraged.

Speaker Change: This model.

Speaker Change: Got it thank you.

Frank G. Louthan: Next question comes from the line of Frank's loosen, the Duane and change your line is open.

Julia M. Laulis: Great, thank you. So you've built quite a bit, I mean you passed about 70,000 homes for the year, yet you're still kind of losing subs. What's sort of the take rate on the new homes passed, and you know when we can start to see that begin to add to the level of subs that you see growing, and at what point do you think we can kind of call a win there and see positive broadband subs for a full year? Frank, I'll start with that one. Todd, feel free to jump in.

Frank G. Louthan: [noise] great. Thank you so.

Frank: <unk> you built quite a bit in the past about 70000 homes for the year, yet still kind of losing sobs, what sort of take right on the new homes passed and and and what can we start to see that began to to add to to the level of of of subs that you that you see growing and at what point do you think it's you can.

Frank: Kind of call a win there and see positive broadband subs for the for a full year.

Speaker Change: Frank I'll I'll start with that one time, you feel free to jump in but.

Julia M. Laulis: But the homestuff that you see came on in the last half, really the last quarter of the year, which actually makes me think about how we approach, how we build. Those will become homes. I mean, those will become customers. A lot of that is fill-in. Some of that is building new plants for new developments, but a lot of it is fill-in, meaning a home has just popped up where we already have plants. And I actually went through every single one of those that were built.

Frank: The hot spot that you see.

Frank: Came on in the last half really the last quarter of the year.

Frank: Which actually makes me think about how we approach how we rebuild but.

Frank: Those will become homes.

Frank: Will become customers a lot of that is fill in some of that is building new plant for new developments spell out of his still I'm needing a home has just popped in where we already have planned and uhm I actually went through every single one of those that was built and the penetration rate there.

Julia M. Laulis: And the penetration rates there match the penetration of their systems if the tenure is longer than a quarter. And in the majority of cases here, it is not. So these represent opportunities for us in 2024. I'm not going to comment on what I think about 2024's growth. What I will say is we are concentrating on growing in 2024 and leaving the guidance out of it. Yeah. And Frank, as you saw for the quarter, CAPEX was considerably higher than, you know, where it was in Q2 and Q3. And we talked about, you know, it's hard to be very, you know, super predictable on what a quarter-to-quarter CAPEX is, even though the full-year CAPEX came in below where we've run in the past.

Frank: The penetration of their systems.

Frank: Tenure is longer than a quarter.

Frank: And the majority of the case here. It is not so these represent opportunities for us in 2024.

Frank: I'm not gonna comment on what I think about 20th 20th Forest Grove.

Frank: I will say is we are concentrating on growing in 2024.

Frank: And.

Frank: And Saturday and Frank as you saw for the quarter Capex was considerably higher than you know where it was in Q2 and Q3 and we talked about you know.

Frank: <unk> you know.

Frank: It's hard to be super predictable on what a quarter to quarter Capex is even though the full year came in.

Frank: Below where we brought in the past and his eyes outline in my remarks will be lower than 2024, as we manage expectations to that kind of low three hundreds or what I'd call. The low end of that 35% to 38% you know as a percentage of EBITDA that we've talked about in previous quarters.

Todd Cucci: And as I've outlined in my remarks, we'll be lower in 2024 as we manage expectations to that kind of low 300s or what I would call the low end of that 35 to 38%, you know, as a percentage of EBITDA that we've talked about in previous quarters. But you can also see that CAPEX moving up in the fourth quarter does correlate to many of those projects that were being completed, had some timing elements associated with them, but also even a few that we initiated as new ones that came with long-term, you know, support from the Enhanced ACAM regulatory programs. So, there will be opportunities for sure for us to prosecute in 2024. Okay, thank you. And just to be clear, so you're saying when you mostly build these areas that you build after one quarter, you're at mid-30 penetration on those homes? No, I'm saying if they've been, they've been homes for a period of time. So we watch them every single week to tell you the truth.

Frank: But you can see also that that tab bags moving up in the fourth quarter.

Frank: Does correlate too many of those projects that will be incomplete. It had some timing elements associated with them, but also even enough to you that we initiated as new ones that came with longterm you know support from the enhanced take him.

Frank: Regulatory program so.

Frank: They will be opportunities for sure for us to prosecute in 2024.

Speaker Change: Okay. Thank you and just to be clear. So you you're saying you when you're mostly these areas that you build after one quarter, you're at mid 30 per cent penetration.

Frank:

Speaker Change: Those homes.

Frank: No I'm, saying, if they've been they've been homes for a period of time. So we watch them every single week to tell you the truth, but these are these only half.

Julia M. Laulis: But these are only have a week, a month, three months in the barn. So their penetration rates are not going to be as high as the system that they exist in. But over time, those new build areas will match the average system penetration or be higher. How long does that take for them to match the existing system?

Frank: A week a month three months in the barn, so they're they're penetration rates are now it's gonna be as high as the system that they existence that over time.

Frank: Build areas will match, the average system penetration or be higher.

Frank: How long does that take for them to match the existing system.

Julia M. Laulis: It really, Frank, it would depend on what system we're talking about. Is that a system like, well, I won't say the name because I also know competitors. Listen, is that a system that doesn't have a competitor other than ELEC? We're going to get there pretty fast. Is that a system with two fiber overbuilders and ELEC?

Frank: It really think it would depend on what system are talking about is that a system like well I won't say the name because I also know competitors list and is that in our system that doesn't have a competitor other than a leg, we're gonna get there pretty fast without a system with two five or over builders Anahuac, it's gonna take us longer.

Julia M. Laulis: It's going to take us longer. Okay, thank you. Our next question comes from the line of Craig Moffett with Moffett Nathanson. Your line is open. I wonder if you could just add a little bit more color to the kinds of offers that you're using when you talk about competing with. It sounds like you're mostly talking about offers to compete with new fiber entrants, but are you also doing offers that are aimed at competing with fixed wireless broadband? And if so, how do those look different than what you're doing in specific geographic markets where you're facing a fiber competitor? Yeah, Craig, and Julie can jump in as well.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from the line of Craig Moffett Moffett Nathan per line is open.

Craig Eder Moffett: Todd I Wonder if you could just add a little bit more color to the kinds of offers that you're you're using when you talk about competing with it sounds like you're mostly talking about offers to compete with with new fiber entrance. But are you also doing offers that are aimed at.

Craig Eder Moffett: Competing with fixed wireless broadband and if so how do those look different than what you're doing in specific geographic Margaret markets, where you're facing a fiber competitor.

Speaker Change: Yeah, Craig Julie.

Speaker Change: Julie can jumping as well, but one of the things we talked about in our queue. Three call was where we had rolled out initially focused on those that value segment, but also to go head to head with that fixed wireless Mobily Architected broadband product was that 100 Meg service at $25.

Todd Cucci: But one of the things we talked about in our Q3 call was where we had rolled out initially focused on both that value segment but also to go head to head with that fixed wireless, mobilely architected broadband product was that, you know, 100 meg service at $25 as a promotional price. And with that, what was really more of called a flash sale in late Q3, at which we piloted different types of offerings in Q4, we saw the sell-in of those initial offers come in meaningfully higher than the tier that was being offered with that promo, if that makes sense. So, in Q3, it was well over two-thirds of the customers that either called in for that offer or came in for that offer. Our great sales team was able to convert them higher based on their needs and listening to their needs and what their average monthly utilization and capacity requirements were. And we see that continuing in the fourth quarter and so far. But we feel it's both.

Todd Cucci: As a promotional price.

Craig Eder Moffett: And with that what was really more of a called out called a flash sail in late two three of which we piloted different types of offerings in queue for we saw the selling of those initial offers come in meaningfully hydrogen mateer that was being offered would that promo if that makes sense. So <unk>.

Todd Cucci: As well over two thirds of the customers that you called in for that offer or came in for that offer.

Craig Eder Moffett: R.

Craig Eder Moffett: Great sales team was able to convert them hired based on their needs and listening to their needs and what their average monthly utilization and capacity requirements were and we see that continuing here in the fourth quarter and today.

Craig Eder Moffett: But we feel as both we feel it's like making sure we go.

Todd Cucci: We feel it's like making sure we go to all cohorts and all segments in these towns and communities that we serve, but ensuring with a better and more reliable product, we can compete head to head with that fixed wireless offering. And you have to also be mindful that in many of our markets, we've talked about this in the past, a fixed wireless offering is based on, you know, the mobile network infrastructure in these markets. And while it's not to say that, you know, some of our markets don't have good service, many of them do not. And not being able to offer a great wireless product in our markets definitely doesn't hurt the opportunity to provide reliable home broadband on a mobilely architected infrastructure. Either way, I guess I would just add that, you know.

Todd Cucci: Two all cohorts and all segments in these towns and communities that we serve but ensuring with a better and more reliable product.

Todd Cucci: We can compete.

Todd Cucci: The head with that fixed wireless offering and you have to also be mindful in many of our markets. We've talked about this in the past it fixed wireless offering is is is based on the mobile network infrastructure in these markets.

Craig Eder Moffett: And while I have to say that.

Craig Eder Moffett: Some of our markets don't get good service many of them do not and not being able to offer a wireless product in our markets definitely doesn't really have the opportunity to provide a reliable home broadband.

Craig Eder Moffett: Infrastructure either.

Speaker Change: I guess I would just add that you know.

Julia M. Laulis: This is a pretty big shift for us in that we are not operating our systems in a one-size-fits-all way. We are innovating, we are testing, we are learning, we are trying things, and we are measuring to see what drives the needle. We're talking to our customers, and it's not just about price, Craig. It's the whole customer journey that we're taking a look at. You know, anything from what their Wi-Fi experience is like and making sure that we're measuring their experience to the device, not just to the node, but every device in their home, for example.

Todd Cucci: This is a pretty big shipped for us and that we are not operating our systems any one size fits all.

Way, we are innovating we are testing we are learning we are trying things we are measuring to see.

Julia M. Laulis: What drives the need over talking to our customers and it's not just about price Craig. It's it's the whole customer journey Uhm that were that were taking a look at you know anything from you know, what's their wifi experience like and making sure that we're measuring their experienced.

Speaker Change: Device not just to the nurse, but every device in their home for example, and just having a maniacal focus on reliability and using the the total of the of the century machine learning and.

Julia M. Laulis: And just having a maniacal focus on reliability and using the tools of this century, machine learning, and AI, to grab the data points that we have and take care of issues before they even become noticeable by customers. So it's a pretty multi-dimensional look at how we approach the customer segment. Can you say anything about whether these offers are primarily first-year discounts, stepping up to a regular price of a two-year discount, or are they an everyday low? It's all over the board. It's all over the board.

Julia M. Laulis: To to grab the data points that we have and take care of issues before they even be calm.

Julia M. Laulis: Notice of all my customers. So it's it's it's a pretty multi dimensional look at how we approach the customer segments.

Julia M. Laulis: Okay can you say anything about are these offers primarily first your discount stepping up to a regular prices into your discount.

Julia M. Laulis: Hello.

Julia M. Laulis: It's all over the board, it's all over the world. There's some of that there's some that are shorter term. There are some that are longer term there some of our multi step up over years or testing all of it and learning what the whole picture looks like not just the tae grades meaning customers coming in the door.

Julia M. Laulis: There's some of that. There's some that are shorter term, too. There are some that are longer term. There are some that are multi-step up over years. We're testing all of it and learning what the whole picture looks like, not just the take rates, meaning customers coming in the door, not just the selling rates of what packages they take when we market that, but what are the retention rates on the back side and the satisfaction as well. But it's very tactical, Craig, to the market and to the competitors. And I think our knowledge of who these competitors are, how they're capitalized, where they are in their life cycle, and in some cases, financially-backed investment cycles can determine many of the different strategies that we employ and will continue to use. But in some cases, we're already seeing people raise prices in those markets. And so we also have to be very mindful of the tenor of those so that you can also respond in that way. And so it's, as Julie said, it is across the board, but it's very tactical. Very helpful, thank you very much.

Julia M. Laulis: Sure.

Julia M. Laulis: And raised about packages they they take on the market that but what are the retention rates on the backside and the satisfaction as well.

Julia M. Laulis: But it's very tactical.

Julia M. Laulis: To the market and to the competitor.

Julia M. Laulis: I think our knowledge of with these competitors are how they're capitalize where they are in there.

Julia M. Laulis: Some cases financially backed investment cycles can determine many of the different strategies that we approach.

Julia M. Laulis: And will continue to use.

Julia M. Laulis: But in some cases, we're already seeing people raise prices in those markets and so we also have to be very mindful of the tenor of those so that you know you.

Speaker Change: You can.

Julia M. Laulis: Also respond in that way and so it's.

Julia M. Laulis: It is it is across the board, but it's very tactical.

Speaker Change: Alright very helpful. Thank you very much.

Craig Eder Moffett: Our next question comes from the line of Steven Cahal with Wells Fargo. Your line is open. Yeah, thank you. I was wondering if we could just tie all this together to talk about EBITDA growth a little bit. So certainly appreciate that you're experimenting and not doing the one size fits all approach anymore. And it sounds like, you know, Julie, you said there's going to be a bit of a journey here.

Julia M. Laulis: Our next question comes from the line of Steven with Wells Fargo. Your line is open.

Speaker Change: Yeah. Thank you I was wondering if we could just tie all this all together to talk about EBITDA growth a little bit. So certainly appreciate that you're experimenting and not doing the one size fits all approach any more and it sounds like you said, there's gonna be a bit of a journey here. So there might be a little more pressure on revenue growth in there has in the past Uhm EBITDA.

Steven S. Cochran: So there might be a little more pressure on revenue growth than there has been in the past. EBITDA was a little weaker in Q4. So we'd just love to hear how we should think about EBITDA growth in 2024. And the second part of the question is, you know, with the more moderate capital spending in 2024 that you talked about, Todd, I think there was some pull-forward of like scalable infrastructure spend in 23. But is any of the moderation in capital spending just a response to a tougher competitive environment that may slow EBITDA growth? And so that'll just help you kind of keep the balance sheet conservative. I know that's a lot.

Steven S. Cochran: It was a little weaker in queue for so we're just loved to hear how we should think about EBITDA growth in 2024, and the second part of the question is you know with the more moderate capital spending in 2024, the shocked about.

Steven S. Cochran: I think there was some poor forward of like scalable infrastructure spending twenty-three, but as any of the moderation in capital spending just a response to a tougher competitive environment.

Steven S. Cochran: <unk>. So that'll just help you kind of keep the balance sheet Conservative I know, there's a lot. Thank you.

Todd Cucci: Thank you. Yeah, I'll hit on a few things there, Steve. Thanks for the question. On the EBITDA growth side, I mean, right now, as you guys know, while we're at 5% penetration on video, that continues to be an accelerated decline. And it still does have some margin in it, although it's also a declining margin, and that is one of the primary contributors to that EBITDA this quarter over quarter being slightly down. As you saw, I think it was about 120% of our revenue declines were due to video, as our core products were up. As we continue to focus on long-term customer growth, acquisition of new customers, retention of existing customers, and that long-term reliable experience for them, it's going to be that factor that we have to continue to learn from, right? And we have to continue to focus on how we can expand that penetration.

Speaker Change: Yeah Uhm, Okay done a few things there Steve Thanks for the question.

Todd Cucci: EBITDA growth side, I mean, right now as you guys know, while we're at 5% penetration on video that continues to be an accelerated decline and it's still it's still does have.

Todd Cucci: Some Margaret although it's also a declining margin.

Todd Cucci: And that is one of the primary contributors to that that EBITDA this quarter over quarter.

Todd Cucci: Slightly down as you saw I think it was like 120 per cent of our revenue declines were were video is.

Todd Cucci: Our core products were up as we continue to focus on longterm customer gross acquisition, new customers retention of existing customers and that longterm.

Todd Cucci: <unk> will experience for them you know, it's gonna, it's gonna be bad factor that we have to continue to learn from right and we have to continue to focus on how can we expand that penetration and is Julie was outlining.

Todd Cucci: And as Julie was outlining, it's not just about price, but price will be a tool in certain areas where we feel it's most appropriate. But the video decline is your core contributor to, you know, where the EBITDA weakness is. But again, as you see margins increasing this quarter, you know, our highest-margin products continue to be the healthiest. As it relates to the spending, I wouldn't say it's in response to a tougher environment. It's really a result of how proactive we've been in investing in these markets. 4.0 architecture is basically complete, you know, until the actives are generally available.

Todd Cucci: Not just about price the price will be a tool in certain areas, where we feel is most appropriate but the video decline is is your core contributor.

Todd Cucci: To you know.

Todd Cucci: Or the EBITDA weaknesses, but again as you see margins increasing.

Todd Cucci: This quarter, you know our highest margin products continue to be the healthiest.

Todd Cucci:

Todd Cucci: As it relates to the spending I wouldn't say, it's in response to a tougher environment. It's really as a result of help proactively Ben.

Todd Cucci: In these markets I'm for it out of architecture is.

Todd Cucci: Basically complete you know until the actives are generally available, but we've been spending considerably Matt we did bring forward. Some discounted equipment, we did accelerate some projects related to the government programs that we're gonna be funding knows for the next 15 years.

Todd Cucci: But we've been spending considerably on that. We did bring forward some discounted equipment. We did accelerate some projects related to the government programs that were going to be funding those for the next 15 years.

Todd Cucci: So that was, for the most part, some of the incremental investment. And throughout 2023, even 2022, when you think about the proactive network investments, but then, you know, some of the, I'll call it, pull forward into Q4. But the go forward is because of how proactive we've been in investing in the net. And I'm my dad, you know.

Todd Cucci: So that was <unk> for the most part for some of the incremental investment and throughout 2023, even 2022 and you think about the proactive network investments, but then you know some of the Ah color pull forward into Q for but.

Todd Cucci: <unk> is because of how proactively been investing in the network.

Todd Cucci: And I My Dad, you know.

Todd Cucci: Capital expenditures has been going down for two year 720, 24 that'll just make here three so it's not something new that is being introduced. This is this is a trend this is where everything going.

Julia M. Laulis: Capital expenditures have been going down for two years. So in 2024, that'll just make year three. So this is not something new that is being introduced. This is a trend. This is where we've been going. I would also note that we're pretty well known amongst our peers for being pretty good at continuous improvement as it relates to being cost-effective. I think you see that in part by our margins.

Julia M. Laulis: I would also note that were pretty well no amongst our peers for being.

Julia M. Laulis: Pretty good at continuous improvement as it relates to being cost effective.

Julia M. Laulis: I think you see that in part by our margins and that is going to continue and ramp up.

Julia M. Laulis: And that is going to continue and ramp up, and we are having a full-court press on integrations in 24 as well. So, bringing all the family of brands that are not yet SparkLight into the SparkLight brand and getting them on our platforms, and just a tremendous amount of operational work going on by amazing teams in 24 that will help us on that side of the business as well. And since I've been with the company, which is almost 25 years now, our focus has been on free cash flow, and it's going to continue to be.

Julia M. Laulis: And we are having a full court press on integrations and 24 as well so bringing all the family of brands that are not yet sparkly sparkly brand and getting them on our platforms and just a tremendous amount of operational work going on by amazing teams in 24.

Julia M. Laulis: That will help us on that side of the business as well.

Julia M. Laulis: Since I've been with the company, which is almost 25 years now our focus has been on free cash flow and it's gonna continue today.

Speaker Change: Great. Thank you.

Julia M. Laulis: Thank you. And we do have our last question from Brandon Nispel with KeyBank Capital Markets. Your line is open.

Speaker Change: And we do have our last question from <unk> with Keybanc capital markets. Your line is open.

Brandon Nispel: Okay, great. Most of mine have been addressed, Ed, but I was wondering if, on ARPU, you could quantify one-time impacts this quarter. I think you mentioned two things, removing data caps and providing unlimited data. So I was hoping you could quantify in terms of the impact on HSD ARPU.

Brandon Nispel: Okay great.

Brandon Nispel: <unk>, but I was wondering if.

Brandon Nispel: I was wondering if you could quantify one <unk> I think you mentioned two things removing data caps and providing unlimited data. So I was hoping you could quantify in terms of the impact.

Brandon Nispel: <unk> and then.

Julia M. Laulis: And then, you know, on your website, on the SPARKlight page, there's a one-gig service for $39.95 for 18 months. Historically, you guys have not been as promotional on the front page, and especially not for that period of time. So I was hoping you could talk about, one, what the reception has been, and two, the decision behind putting that as sort of the lead product. Thanks. Okay, let's see. ARPU. Well, yeah, yeah. So, breaking down what happened to ARPU in the fourth quarter, which is what I think you're asking for, Brandon.

Brandon Nispel: Right.

Julia M. Laulis: Dark like page, there's a one gig service for 39 95 for 18 months and historically you guys had not been as promotional on the front broken, especially not for that period of time. So I was hoping you could talk about one what the reception has been into the decision behind putting that sort of the lead product.

Julia M. Laulis: <unk>.

Brandon Nispel: Okay, let's see <unk>.

Brandon Nispel: Yeah, Yeah, so breaking down.

Julia M. Laulis: And to argue in the fourth quarter, which is what I think you're asking for Brandon.

Julia M. Laulis: Yeah. Yeah, okay. So the majority of the decrease came from promos and discounts, with a piece of it coming from, the sort of gifting back data, if you will. So new customers that come on in certain markets get data, unlimited data, included in their package rate. The package rates have stayed the same in those markets, but they're getting unlimited as sort of a perk, if you will, where we used to have data guidelines and that would... result in fees to our So if you're a new customer in those markets, you don't have that anymore. Um, The $39.95, I'm trying to look and see what marks it. It is literally, "One size does not fit all." Almost every market or every segment within a market has some element of variable pricing. So if our normal rates are still 70, 80, and 90 but 300, 600 a gig, you could see promos in the marketplace. But generally speaking, a promo for a gig would be $69.95 or $70.

Brandon Nispel: Yes, yes.

Brandon Nispel: Yes, okay. So the the majority of the decrease came from promise and discounts.

Julia M. Laulis: With a piece of it coming from.

Julia M. Laulis:

Julia M. Laulis: Right.

Julia M. Laulis: The sort of getting back of data if you will serve new customers that come on in certain markets.

Julia M. Laulis: Data unlimited data included in their package brains package range of stayed the same in those markets, but they're getting unlimited is sort of a Kirk if you will where we used to.

Julia M. Laulis:

Julia M. Laulis: Guidelines and in that way.

Julia M. Laulis: <unk> to us.

Julia M. Laulis: So if you're a new customer in those markets you don't have that anymore.

Julia M. Laulis: Uhm.

Julia M. Laulis: 39, 95, and I'm trying to look and see what mark.

Julia M. Laulis: It is literally.

Julia M. Laulis: One size does not at all every almost every market or every segment within a market has some element of variable pricing. So if.

Julia M. Laulis: Normal rates are still 70 89 for 306 hundred gig.

Julia M. Laulis: You could see promos in the marketplace, but generally speaking a promo for a gig would be 69, 95 or $70. So if you're looking at a rate of $39.

Julia M. Laulis: So if you're looking at a rate of $39, you're looking at a market that is trying to find one. Oh, let's see. Do you know what market you looked at because that just sparks like.com.

Julia M. Laulis: Looking at a market that is and I'm trying to find one let's see.

Julia M. Laulis: You know my market you looked at because that.

Julia M. Laulis: <unk> Dot com.

Julia M. Laulis: Well, we would have had to have had a market zip code, I think, but there are markets where we are offering that. And those are hypercompetitive marketplaces. And we're driving gig selling. And we believe that in the future, we'll be able to monetize that more. But the other piece of that is selling. That, in part, is to get the phone to ring, right?

Julia M. Laulis: Yeah.

Julia M. Laulis: Age.

Julia M. Laulis: You would've had to add a.

Julia M. Laulis: Market.

Julia M. Laulis: ZIP code I think but there are markets, where we are offering that in those are hyper competitive marketplaces, and we're driving gig selling and we believe that in the future we'll be able to.

Julia M. Laulis: Monetize that.

Julia M. Laulis: But.

Julia M. Laulis: Piece of that is the stolen.

Julia M. Laulis: That's in part is to get the phone to ring right.

Julia M. Laulis: In those markets, we might actually have a multi-gig product that we could upsell on, and that's just getting the phone to ring. If I could follow up, you mentioned 80% of your customers you're selling are at 300 megs or above. What type of intake ARPUs are you seeing with the service?

Julia M. Laulis: Markets, we might actually have a multi getting product that we can <unk>.

Julia M. Laulis: [noise] if I could follow up you mentioned 80 per cent of your customers you're selling is at 300, megs or above what type of intake. Our crews are you see with the service and then I wanted to ask about a C. P. Since you mentioned and then get grew quite a bit sequentially.

Julia M. Laulis: And then I wanted to ask about ACP, since you mentioned it. I think it grew quite a bit sequentially. I think last quarter you mentioned you had 35,000 customers on ACP. Now it's 50. So that implies sort of the base core customers were down quite a bit this quarter. So I'm hoping you could unpack that a little bit. Thanks. Yeah, hey, Brandon, on the ACP side, it's a little bit north of 35 but absolutely south of 50.

Julia M. Laulis: <unk> you mentioned you had 35000 customers on a C P I X.

Julia M. Laulis: 55.

Speaker Change: Sort of a base core customers was down quite a bit.

Brandon Nispel: <unk>, so hoping you could help unpack that a little bit.

Speaker Change: Yeah bring it on the a C. P side, there's a little bit north of 35 in <unk> South of 50.

Todd Cucci: I think it's important to note that less than 10,000 that are in the fully funded category there, where they're in that kind of baseline pricing and packaging that effectively provides them with, you know, free internet. And that's probably the more, I would call it, susceptible customer base, but we're already working with all of those customers in terms of what that transition will look like, assuming that the program does go away. Yeah, the majority of the customers were our customers before they signed up for ACP, so they used ACP to increase the tier of service that they received. And so, again, we can go and look at what they're paying now and what their usage is now and make sure that we position them nicely into something that they can afford. And I'm going to have to get back with you, Brandon. I don't think I know the ARPU of our selling for the fourth quarter off the top of my head. Well, we don't disclose that.

Speaker Change: I think important to note that slept in 10000.

Todd Cucci: Or in a fully funded category there.

Todd Cucci: Where are there in that kind of baseline pricing and packaging.

Todd Cucci: <unk> provides them with free Internet.

Todd Cucci: And that's probably the more I would call them susceptible.

Todd Cucci: Customer base, but we're already working with all of those customers in terms of what that transition will look like assuming that the program does go away.

Todd Cucci: Yeah, the majority of the customers.

Todd Cucci: Our customers before they signed up for Acp's I use a C P.

Todd Cucci: To increase tier of service that they receive.

Todd Cucci: And so again, we can go and look at what they're paying now and what their usage is now and make sure that we physician in nicely into something that.

Todd Cucci: Can afford.

Todd Cucci: I have to get back with your brain and I don't think I know the <unk> are selling for the fourth quarter off the top of my head, but we don't disclose that anyway. So there you go.

Julia M. Laulis: Well, there you go. Thanks for taking the questions. You're welcome. There are no further questions at this time. Ms. Laulis, I turn the call back over to you. Thank you, Desiree. So before closing, I would like to again thank our associates for their insights, ideas, and efforts, which make the difference in our pursuit of market share growth. Thank you, everyone, for your time and attention today. We appreciate your continued support and interest in Cable ONE. Ladies and gentlemen, this concludes today's conference call. You may now disconnect. www.cableoneil.com

Speaker Change: Okay. Thanks for taking my questions.

Speaker Change: You're welcome.

Speaker Change: There are no further questions at this time.

Desiree: I tried to call back over to you.

Speaker Change: Thank you <unk>.

Julia M. Laulis: So before closing I would like to again, thank our associates for their insights ideas and efforts, which make the difference in our pursuit of market share growth.

Julia M. Laulis: Thank you everyone for your time and attention today. We appreciate your continued support and interest and cable one.

Julia M. Laulis: Ladies and gentlemen. This concludes today's conference call you may now disconnect.

Julia M. Laulis: [music].