Q1 2024 ATN International Inc Earnings Call
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Operator: Good day, and thank you for standing by. Welcome to the ATN International Q1 2024 Earnings Conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You'll then hear an automated message that advises your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Sotrowski, Corporate Treasurer and Head of Investors.
Good day, and thank you for standing by.
Speaker Change: Welcome to the AG and International Q1, 'twenty 'twenty four earnings conference call and webcast.
At this time all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session.
To ask a question during the session you will need to press star one one on your telephone you'll then here an automated message that advises your hand is right.
Speaker Change: To withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded.
Speaker Change: I would now like to hand, the conference over to your first speaker today Michel to trunk E corporate treasurer and head of investors.
Michelle Sotrowski: Thank you, Operator, and good morning, everyone. I'm joined today by Brad Martin, ATN's Chief Executive Officer, and Carlos Doglioli, ATN's Chief Financial Officer. This morning, we'll be reviewing our first quarter 2024 results and providing additional insights on the 2024 outlook. As a reminder, we announced our 2024 first quarter results yesterday afternoon after the market closed. Investors can find the earnings release and conference call slide presentation on our Investor Relations website. Our earnings release and the presentation contain certain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operations.
Michel: Please go ahead.
Michel: Thank you operator, and good morning, everyone I'm.
Michel: I'm joined today by Brad Martin Atms, Chief Executive Officer, and Carlos totally Ali Atms, Chief Financial Officer.
Michel: This morning, we'll be reviewing our first quarter 2024 results and providing additional insights on the 'twenty 'twenty four outlook.
Michel: As a reminder.
Michel: We announced our 2024 first quarter results yesterday afternoon after the market closed.
Investors can find the earnings release and conference call Slide presentation on our Investor Relations website.
Michel: Our earnings release and the presentation contains certain forward looking statements.
Michel: Turning to our current expectations objectives, and underlying assumptions regarding our future operations.
Michelle Sotrowski: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information for investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable gap measures and for further information regarding the factors that may affect our future operating results, see Notes to Financial Measures. Please refer to our earnings release on our website at atni.com or the 8k filing provided to the SEC, and now I'll turn the call over to Brad. Thank you.
Michel: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described.
Michel: Also in an effort to provide useful information for investors. Our comments today include non-GAAP financial measures.
Michel: For details on these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our future operating results.
Michel: Please refer to our earnings release on our website at <unk> Dot com or the 8-K filing provided to the SEC.
Michel: And now I'll turn the call over to Brad.
Brad W. Martin: Thank you, Michelle. Good morning, everyone, and thank you for joining us. The ATN team remains focused on advancing our first of fiber and glass and steel strategies to enhance our fiber-rich digital infrastructure and next generation fixed wireless capability, positioning ATN to capture the growing demand for high quality broadband in the remote and rural markets that we serve. Although we saw growth in key operational metrics year-over-year resulting from the strategy, our first quarter financial results were softer than expected.
Brad W. Martin: Thank you Michele good morning, everyone and thank you for joining us.
Brad W. Martin: <unk> team remains focused on advancing our first fiber in glass and steel strategies to enhance our fiber rich digital infrastructure and next generation fixed wireless.
Brad W. Martin: Positioning HCN to capture the growing demand for high quality broadband the remote and rural markets that we serve.
Brad W. Martin: Although we saw growth in key operational metrics year over year, resulting from our strategy, our first quarter financial results were softer than expected.
Brad W. Martin: I'll begin by briefly covering the dynamics from our first quarter and a revised outlook for the year. Then I will outline our progress implementing our strategy before turning the call over to Carlos to review our first quarter financials and revised 2024 guidance in more detail, starting with our first quarter results. Our first quarter revenue was up 1% and adjusted EBITDA was down 3% versus the prior year quarter.
Brad W. Martin: I'll begin by briefly covering the dynamics from our first quarter and our revised outlook for the year.
Brad W. Martin: Then I'll outline our progress executing our strategy before turning the call over to Carlos to review, our first quarter financials, and revised 2024 guidance in more detail.
Carlos Ali: Starting with our first quarter results.
Carlos Ali: Our first quarter revenue was up 1% and adjusted EBITDA was down 3% versus the prior year quarter.
Carlos Ali: Our U S. Telecom segment performance was impacted by delays in major carrier services projects and weaker than expected business revenue.
Carlos Ali: These dynamics impacted our domestic segment's first quarter results and full year outlook.
Carlos Ali: The U S shortfall was partially offset by solid performance in our international segment, where revenue and adjusted EBITDA grew 3% respectively.
Carlos Ali: We grew high speed broadband services and business customer revenue.
Brad W. Martin: Our U.S. telecom segment performance was impacted by delays in major carrier services projects and weaker-than-expected business revenues. These dynamics impacted our domestic segment's first quarter results and full year outcomes. The U.S. shortfall was partially offset by solid performance in our international segment, where revenue and adjusted EBITDA grew 3% and 3%, respectively, as we grew high-speed broadband services and business customer revenue. Today, we are lowering our guidance to reflect the softer than expected first quarter results as well as our current expectations for the balance of the year, which have been impacted primarily by two factors.
Carlos Ali: Today, we are lowering our guidance to reflect the softer than expected first quarter results as well as our current expectations for the balance of the year, which has been impacted primarily by two factors.
Carlos Ali: First.
Carlos Ali: Well now we have line of sight to the U S carrier services projects moving ahead, the delayed delivery timing will result in some of the previously forecasted revenue moving out of 2024.
Carlos Ali: Secondly, we secured fewer new business contracts for major government program in the first quarter.
Carlos Ali: We expected a higher win rate and we expect that these contracts will help offset the step down in the emergency connectivity fund program expired at the end of the first quarter as we had previously signaled.
Carlos Ali: In response to these dynamics, we are sharpening our focus on managing operating and capital costs, which Carlos will speak to further in his remarks.
Carlos Ali: Additionally, we are accelerating our efforts to bring in revenue opportunities in the second half of the year.
Carlos Ali: We built a strong sales pipeline and believe our expanded and upgraded network positions us well convert these opportunities.
Carlos Ali: Additionally, we recently brought in several key leadership hires that add further telecom and operational expertise to the team.
Brad W. Martin: First, now we have line of sight to the U.S. Carrier Services projects moving ahead. The delayed delivery timing will result in some of the previously forecasted revenue moving out of 2020. Secondly, we secured fewer new business contracts for major government programs in the first quarter.
Carlos Ali: This includes several new operational leaders and new commercial leadership in our domestic markets.
Carlos Ali: These talent additions further reinforced our ability to convert growth opportunities and efficiently operate our business.
Carlos Ali: Now turning to strategic and operational updates.
Carlos Ali: We remain focused on our first fiber in glass and steel strategies to strengthen Atms market position enable ATM to grow high speed data subscribers increased recurring revenues.
Carlos Ali: <unk> free cash flow and deliver value creation for our shareholders for years to come.
Carlos Ali: The future of telecommunications as high speed data connections and gigabit class solutions.
Carlos Ali: Two fiber or fixed wireless.
Brad W. Martin: We expected a higher win rate, and we expected these contracts would help us step down in the Emergency Connectivity Fund program that expired at the end of the first quarter, as we have previously seen. In response to these dynamics, we are sharpening our focus on managing operating and capital costs, which Carlos will speak to further in his remarks. Additionally, we are accelerating our efforts to bring in revenue opportunities in the second half of the year.
Carlos Ali: This is why for the past few years, we have been investing in the enhancement of our high speed networks reach and capabilities above historical capex levels.
Carlos Ali: These investments have continued to yield growth across several key operational metrics.
Carlos Ali: Notably as.
Carlos Ali: As of the end of the first quarter, we've increased broadband homes passed by high speed data by 28%.
Carlos Ali: <unk> high speed broadband customers by 12% when compared to year ago period.
Carlos Ali: We also continue to maintain high levels of customer retention.
Carlos Ali: Replacing a decommissioning legacy copper networks with fiber networks remains a key strategy as well.
Carlos Ali: Fiber has many advantages positioned ATM to deliver high margins over time.
Carlos Ali: We exited the first quarter with 1692 fiber route miles or 5% year over year increase.
Brad W. Martin: We built a strong sales pipeline and believe our expanded and upgraded network positions us to convert these opportunities. Additionally, we recently brought in several key leadership hires that add further telecom and operational expertise to the team. This includes several new operational leaders and new commercial leadership in our domestic market.
Carlos Ali: We also increased our fiber homes passed footprint by 19%.
Carlos Ali: Now taking a closer look at operational highlights by segment.
Carlos Ali: Starting with our international segment, which represents about half of Atms revenue.
Carlos Ali: Across this segment, we continue to see rapid uptake of high speed broadband with high speed data subscriber growth of 11% year over year.
Carlos Ali: Another bright spot in area that we have targeted for growth is revenue for international business, which was up approximately 13% year over year.
Brad W. Martin: These talented additions further reinforce our ability to convert growth opportunities and efficiently operate our business. Now turning to strategic and operational, we remain focused on our first to fiber and glass and steel strategies to strengthen ATN's market position, enable ATN to grow high-speed data subscribers, increase recurring revenues, expand free cash flow, and deliver value creation for our shareholders for years to come. The future of telecommunications is high-speed data connections and gigabit cloud solutions, whether through fiber or fixed wireless.
Carlos Ali: Turning to our U S segment, which accounts for the other half of Atms revenue.
Carlos Ali: In the U S. We're focused on building out our digital infrastructure to support the evolving needs of our carrier customers. While also expanding our fiber network to bring fiber fed high speed data services to underserved rural markets.
Carlos Ali: Although we experienced some delays in major carrier services project in the first quarter. We continued to achieve several important operational milestones of our U S markets.
Carlos Ali: At the close of the first quarter, we increased broadband homes passed by high speed data by 75% year over year to over 131000 homes.
Carlos Ali: This expanded footprint represents an opportunity for ATM as we focus on leveraging our assets to increase the market penetration and grow our business.
Carlos Ali: Moving on to an update on grant funding.
Carlos Ali: In the U S Grant funding remains key to our strategy.
Carlos Ali: While no new grants were awarded in the first quarter, we continue working off past grants awarded.
Carlos Ali: Since the start of 2023, ATM and our partners has secured a total of $91 million of grants and subsidy funding in the U S.
Carlos Ali: On top of the $155 million for 2022 year.
Brad W. Martin: This is why, for the past two years, we have been investing in the enhancement of our high-speed network's reach and capabilities above historical CapEx levels. These investments have continued to yield growth across several key operational metrics. Notably, at the end of the first quarter, we've increased broadband homes passed by high-speed data by 28% and grew high speed broadband customers by 12% when compared to a year ago. We also continue to maintain high levels of customer retention.
Carlos Ali: These funds will support our.
Carlos Ali: Our net expansion and customer and revenue growth, even as the pace of our self funded capital expenditures decrease as planned.
Carlos Ali: Regarding beat although some states have delayed their planning, we remain ready and well positioned to compete for funding as opportunities come to fruition and our operating states.
Carlos Ali: And finally, we want to comment on the affordable connectivity program.
Carlos Ali: Our exposure to ACP remains minimal at approximately 15000 subscribers and we continue to action mitigation plans.
Carlos Ali: Others in the industry, we experienced earlier than anticipated shifts in customer purchasing decisions ahead of the program's exploration.
Carlos Ali: The impact is expected to be minimal to Atms revenue and net neutral on our profitability dynamics are reflected in our revised guidance.
Carlos Ali: Before turning the call over to Carlos I want to reiterate our priorities for 2024, which include.
Brad W. Martin: Replacing and decommissioning legacy copper networks with fiber networks remains a key strategy as well. Fiber's many advantages position ATN to deliver high margins over time. We exit the first quarter with 1,692 fiber route miles, a 5% year-over-year increase. We also increased our fiber homes past footprint by 19%.
Carlos Ali: Accelerating efforts to close incremental revenue opportunities in the pipeline to leverage our expanded and upgraded network.
Carlos Ali: Growing our high speed network subscriber base.
Carlos Ali: And further expanding our fiber footprint through targeted internally funded investments, albeit at a reduced level.
Carlos Ali: Leveraging the grants we have already been awarded while pursuing further economically viable grant funding to augment internal investments in the future.
Carlos Ali: Advancing margin improvement initiatives, along with executing a broad range of cost reduction actions to align our cost structure and improve operating leverage.
Brad W. Martin: Now taking a closer look at operational highlights by segment. Starting with our international segment, which represents about half of ATN's revenue. Across this segment, we continue to see a rapid uptake of high-speed broadband, with high-speed data subscriber growth of 11% year-over-year. Another bright spot and area that we have targeted for growth is revenue for international business, which is up approximately 13% year over year. Turning to our U.S. segment, which accounts for the other half of ATN's revenue.
Carlos Ali: And finally prudently managing our balance sheet with the goal of lowering our leverage over time.
Carlos Ali: And with that I'll hand, the call over to you Carlos.
Carlos Ali: Thank you Brad.
Carlos Ali: Good morning, everyone.
Carlos Ali: Brian <unk> reviewed our first quarter results came in below our expectations.
Carlos Ali: Given the first quarter's performance our current assessment of market dynamics, we are focused on strengthening our basis revenue pipeline and accelerating several cost reduction actions.
Carlos Ali: Today, we're revising our full year guidance, which I will expand upon in a moment.
Carlos Ali: Turning now to a detailed review of our results.
Carlos Ali: Starting with the income statement.
Carlos Ali: In Q1.
Carlos Ali: Total company revenue up $188 8 million was up 1%.
Carlos Ali: Compared with the same period in.
Carlos Ali: In slide 23.
Carlos Ali: Excluding construction revenues.
Carlos Ali: Service revenues were flat.
Carlos Ali: There were several puts and takes in the quarter.
Carlos Ali: Across the company.
Brad W. Martin: In the U.S., we're focused on building out our digital infrastructure to support the evolving needs of our carrier customers while also expanding our fiber network to bring fiber-fed high-speed data services to underserved rural markets. Although we experienced some delays in major carrier services projects in the first quarter, we continue to achieve several important operational milestones in our U.S. market. At the close of the first quarter, we increased broadband homes passed by high-speed data by 75% year-over-year to over 131,000 homes.
Carlos Ali: <unk> growth in fixed revenues.
Carlos Ali: Which were partially offset by declines in mobility and carrier services revenues.
Carlos Ali: The primary offset to growth related to the delayed delivery.
Carlos Ali: There were several carrier services project and soft basis revenues in our U S Telecom segment.
Carlos Ali: Operating income in the first quarter was $4 6 million versus <unk> 6 million in Q1 of <unk>.
Carlos Ali: Right.
Carlos Ali: The increase was due to lower restructuring expenses and reduced depreciation and amortization expenses compared with the prior year.
Carlos Ali: Net loss in Q1 was $6 3 million or a loss of <unk> 50 per share, which included $1 2 million of restructuring expenses at.
Carlos Ali: At $2 $5 million year over year increase in interest expense.
Carlos Ali: And $1 6 million in fact expenses versus a benefit in last year's first quarter.
Carlos Ali: This compares with the prior year's net loss of $5 9 million or a loss of 44 per share, which included $2 9 million of restructuring expenses.
Carlos Ali: Adjusted EBITDA for the first quarter was $43 5 million down 3% from the year ago period, primarily due to a $1 3 million increase in cost of service.
Brad W. Martin: This expanded footprint represents an opportunity for ATN as we focus on leveraging our assets to increase market penetration and grow our business. Moving on to an update on grant funding. In the U.S., grant funding remains key to our strategy. While no new grants were awarded in the first quarter, we continue working off past grants awarded.
Carlos Ali: Looking now on the segment performance.
Carlos Ali: Beginning with our international segment.
Carlos Ali: Revenues reached $93 1 million up 3% year over year our.
Carlos Ali: Our international segment saw strong year over year high speed data subscriber growth.
Carlos Ali: <unk> from our network upgrade and expansion efforts that drove increased fixed broadband revenues up 4%.
Carlos Ali: This more than offset some softness in the voice portion of mobility revenues.
Carlos Ali: Notably, we're seeing strong demand for data mobile subscriber subscriptions.
Brad W. Martin: Since the start of 2023, ATN and our partners have secured a total of $91 million of grants and subsidy funding in the US, on top of the $155 million for the 2022 year. These funds will support our expansion and customer revenue growth, even as the pace of our self-funded capital expenditures decreases. Regarding BEAD, although some states have delayed their planning, we remain ready and well-positioned to compete for funding as opportunities come to fruition in our operating system.
Carlos Ali: Solid revenue growth and the benefits of the restructuring efforts taken in February three led to adjusted EBITDA of $39 3 million.
Carlos Ali: An increase of 3% in the quarter.
Carlos Ali: We expect to see further benefit from the addition of our restructuring efforts taken in Q1 and other cost reduction efforts throughout FY 'twenty four.
Carlos Ali: In our domestic segment as I mentioned earlier Q1 revenues were $93 7 million down 2% year over year due to delayed and carrier services project at low basis growth.
Carlos Ali: Adjusted EBITDA for the domestic segment was $3 7 million.
Carlos Ali: Around 9% compared with the prior year.
Carlos Ali: This was due to the lack of revenue growth and higher cost of services in the quarter.
Carlos Ali: Okay.
Carlos Ali: Moving on to the balance sheet and cash flow highlights.
Carlos Ali: We ended the quarter with a net debt to adjusted EBITDA ratio of two five times.
Carlos Ali: On total debt outstanding of $541 million.
Brad W. Martin: And finally, we want to comment on the Affordable Connectivity Program. Our exposure to ACP remains minimal at approximately 15,000 subscribers, and we continue to take action on mitigation plans. Like others in the industry, we experienced earlier than anticipated shifts in customer purchasing decisions ahead of the program's expiration. The impact is expected to be minimal to ATN's revenue and net neutral to our profitability, dynamics that are reflected in our revised guidance.
Carlos Ali: Net cash provided by operating activities in Q1 was $23 2 million.
Carlos Ali: Up from 16 million in the prior year period, driven primarily by improvements in working capital.
Carlos Ali: Our plan remains to strengthen our balance sheet and continue to expand that flows.
Carlos Ali: Turning now to capital expenditures.
Carlos Ali: Q1, Capex was $36 million net of $13 $5 million of green vertical capital expenditures.
Carlos Ali: This compares to $80 6 million made up $2 1 million and Reimbursable capital expenditures in the prior year quarter.
Carlos Ali: We're quite grateful for we are reducing our capex spending guidance compared with our expectations.
Carlos Ali: I will elaborate further during my outlook discussion.
Carlos Ali: In Q1, we returned capital to our shareholders through $3 7 million in dividend.
Carlos Ali: $100000 and repurchased shares.
Carlos Ali: Having completed the review of our results I would like to expand further on our accelerated plan to capture additional cost savings in the year and better align our cost structure with our go forward basis.
Brad W. Martin: Before turning the call over to Carlos, I want to reiterate our priorities for 2024, which include accelerating efforts to close incremental revenue opportunities in the pipeline to leverage our expanded and upgraded network, growing our high-speed network subscriber base, and further expanding our fiber footprint through targeted internally funded investments, albeit at a reduced level. Leveraging the grants we have already been awarded while pursuing further economically viable grant funding to augment internal investments in the future.
Carlos Ali: In my short time here at ATM I have been closely assessing our basis is with an eye on how we can improve our profit margin to better align with industry benchmark and increase returns to shareholders.
Carlos Ali: Bringing a fresh perspective to this analysis, that's allowed us to identify opportunities for capturing additional cost savings.
Carlos Ali: Our leverage leveraging further efficiencies with common supply to the streamlining actions.
Carlos Ali: In light of current business dynamics, we are approaching this task with heightened urgency.
Carlos Ali: While maintaining his we're repairing peripheral require careful planning and be implemented over time, we're preparing to take action as soon as operationally possible.
Carlos Ali: It is our goal to start to derive benefits from some initiatives in the second half of FY 'twenty four.
Carlos Ali: And ensure our long term financial success.
Carlos Ali: With that I will move on to a review of frankly for guidance.
Carlos Ali: Yes.
Carlos Ali: Today, we're updating our full year 2020 for outgrowth to reflect the impact of Q1, our current expectations for the balance of the year.
Carlos Ali: The company now expects.
Brad W. Martin: Advancing margin improvement initiatives along with executing a broad range of cost reduction actions to align our cost structure and improve operating leverage. And finally, prudently managing our balance sheet with the goal of lowering our leverage over time. And with that, I'll hand the call over to you, Carlos. Thank you.
Carlos Ali: Revenues in the range of 737.
Carlos Ali: For the full year.
Carlos Ali: Down from our previous range of $350 to $770 million.
Carlos Ali: Adjusted EBITDA in the range of 190 to 200 million for the full year.
Carlos Ali: <unk> from the previous range of $200 million to $208 million.
Carlos Ali: Capital expenditures in the range of 100 to 110.
Carlos Ali: $10 million net of reimbursed amounts down from the prior range of $110 million to $105 million.
Carlos Ali: As we balance decrease in operating cash.
Carlos Ali: And lastly, we now expect to exit the year with a net debt ratio of two five to $2 five.
Carlos Doglioli: Good morning, everyone. As Brad previewed, our first quarter results came in below our expectations. Given the first quarter's performance and our current assessment of market dynamics, we are focused on strengthening our business revenue pipeline and accelerating several cost reduction activities. Today, we're revising our four-year guidance, which I will expand upon in a moment.
Carlos Ali: Which compares to our prior target of $2 25, and two four times.
Carlos Ali: In the short term, we could see our net debt ratio move up that range with the working capital needs during.
Carlos Ali: During the year driven by the timing of reimbursement.
Carlos Ali: Our objective objective remains to bring down leverage closer to two times over the medium term.
Carlos Ali: Based on our current plan, we expect the cadence of adjusted EBITDA in 2024, the tracked closely with joint victory with over 50% of the adjusted EBITDA in the second half of the year.
Carlos Ali: Finally.
Carlos Ali: During my first few months with the company I have been able to meet with our shareholders.
Carlos Ali: With members of the APM theme across our markets.
Carlos Ali: It's given me a great appreciation for what we make possible and the importance of our mission.
Carlos Ali: We certainly have more work to do but I'm confident that we're taking the access necessary to position ATM to optimize our growth opportunities and deliver sustained value for shareholders.
Carlos Doglioli: Turning now to a detailed review of our results, starting with an income statement for Q1. Total company revenue of $186.8 million was up 1% compared with the same period in 2023, excluding construction revenue. [inaudible] There were several plus updates on the board.
Speaker Change: With that I.
Carlos Ali: I'll turn the call back over to Brian.
Brian: Thanks Carlos.
Brian: We are committed to managing the business to deliver exceptional value to our shareholders employees customers partners and local communities.
Brian: There is work can be done in the quarters ahead, but the leadership team and the board believe that we have the right strategy team and offerings in place to deliver on our plans for 2024.
Brad Martin: Our enhanced digital footprint offers many exciting possibilities for how we can more expansively serve our customers.
Brian: And deliver durable and profitable growth.
Brian: Cash flow expansion and value creation well into the future.
Carlos Doglioli: Across the company, we experienced growth in fixed revenues, which were partially offset by declining mobility and carrier services revenues. The primary offset to growth related to the delayed delivery of several carrier services projects and soft business revenues in our U.S. telecom sector. Operating income in the first quarter was $4.6 million versus $0.6 million in Q1 of 2023. The increase was due to lower restructuring expenses and reduced depreciation and amortization expenses compared with the prior year.
Speaker Change: With that operator wed like to open up for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Speaker Change: As a reminder to ask your question.
Carlos Doglioli: Need to press star one on your telephone.
Speaker Change: Wait for your name to be announced.
Speaker Change: Withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile our Q&A roster.
Speaker Change: Our first question today comes from Rick Prentiss with Raymond James Your line is open.
Richard Hamilton Prentiss: Good morning, Ron.
Richard Hamilton Prentiss: Good morning, Eric.
Richard Hamilton Prentiss: Hey.
Speaker Change: The first question.
Richard Hamilton Prentiss: <unk>, obviously weak trends in a couple of the spots and delays on projects.
Richard Hamilton Prentiss: When you guys gave.
Richard Hamilton Prentiss: Reiterated guidance back in late February.
Richard Hamilton Prentiss: What really changed to make one to come in so like was it the win rate or can you help us just elaborate a little further on.
Speaker Change: What changed really in with two months from from late February to where we're at now and then what can you tell us about April trends.
Carlos Doglioli: The net loss in Q1 was $6.3 million, or a loss of $0.50 per share, which included $1.2 million of restructuring expenses, $2.5 million of year over year increasing interest expense, and $1.6 million in tax expenses versus a benefit in last year's first quarter. This compares with the prior year's net loss of $5.9 million, or a loss of $0.44 per share, which included $2.9 million of restructuring expenses. Adjusted EBITDA for the first quarter was $43.5 million, down 3% from the year-ago period, primarily due to a $1.3 million increase in cost of service. We are now looking at the segment's performance.
Speaker Change: So Rick good morning, So the primary dynamic and the change in the last since.
Rick: The last guidance.
Carlos Doglioli: The area, we spoke to around business revenues.
Richard Hamilton Prentiss: Really in one market that we're part of a big program to secure.
Rick: Significant contracts and that dynamic.
Rick: That's that sequence of wins is an annual schedule that gets awarded in late Q1 early Q2.
Rick: Really just we were not able to convert on the win rate that we wanted we did.
Rick: Add some wins incrementally, but it wasn't enough to make up for the gap in our ECS funding.
Speaker Change: Okay, and then as far as visibility for the rest of the year over Carlos you mentioned kind of a 60 40 split on EBITDA, but how confident are you and what gives you that confidence.
Rick: Take the guidance, where it is now with the visibility given the U S economy and other items.
Rick: Hey, Rick Thanks for the question in terms of the guidance, we believe that it's inappropriate revision based on discussions that we've been having with our team and their updated view on the outlook coming out of Q1.
Carlos Doglioli: Beginning with our international segment, revenues reached 93.1 million at 3% year over year. Our international segment saw strong year-over-year high speed data subscriber growth, resulting from our network upgrades and expansion efforts that drove increased fixed broadband revenues at 4%. This more than offsets some softness in the voice portion of mobility revenue. Notably, we're seeing strong demand for data mobile subscriptions.
Speaker Change: Okay and.
Speaker Change: On another vein.
Speaker Change: Obviously, the stock's down significantly today.
Richard Hamilton Prentiss: Where what's the ability to do stock buybacks, but then balancing that with liquidity as well.
Richard Hamilton Prentiss: As you look at.
Rick: How do you want to manage the balance sheet and I'm a shareholder returns.
Speaker Change: I think at this point, Rick we continue to have the programs that we currently have.
Speaker Change: We're not we're not necessarily yet at this point.
Carlos Doglioli: Pointing anything forward different than what we had got already satellites.
Carlos Doglioli: Solid gravity growth and the benefits of the restructuring efforts taken in 2023 led to adjusted EBITDA of $29.3 million, an increase of 3% on the board. We expect to see further benefits from the additional restructuring efforts taken in Q1 and other cost reduction efforts throughout 2024. In our domestic segment, as I mentioned earlier, Q1 revenues were $93.7 million, down 2% year-over-year due to delayed in-career services projects and slow business growth. Adjusted EBITDA for the domestic segment was $20.7 million, down 9% compared with the prior year. This is due to the lack of revenue growth and higher cost of services along the border.
Carlos Doglioli: In terms of in terms of how we are managing.
Rick: The best answer.
Rick: As we stated in the <unk>.
Rick: <unk>.
Speaker Change: Sorry, David.
Rick: On.
Rick: Our discussion of the business.
Carlos Doglioli: It's going to be a combination of continued execution.
Carlos Doglioli: And.
Carlos Doglioli: And cost management.
Carlos Doglioli: And we were about.
Rick: In my remarks, we're going to we're going to go after that with heightened urgency.
Carlos Doglioli: Over the coming quarters.
Carlos Doglioli: Okay.
Rick: And then are there any assets that might make sense to sell that you maybe are not getting value for in the public markets or in driving results and thoughts on potential asset sales.
Speaker Change: So Rick Yes, we yes, we don't.
Richard Hamilton Prentiss: Yes, we don't speak to that but we obviously look always at the opportunities that are out there to maximize shareholder value.
Speaker Change: Okay. Thanks, Good luck guys.
Speaker Change: Thank you.
Speaker Change: Thank you for your question.
Speaker Change: Yes.
Carlos Doglioli: Our next question comes from Greg Burns with Sidoti Mr. Burns Your line is open.
Good morning could you just further elaborate on the dynamics.
Gregory John Burns: Within the carrier services.
Carlos Doglioli: Moving on to the balance sheet and capital highlights, we ended the quarter with a net debt-to-adjusted EBITDA ratio of 2.5 times, on total debt outstanding of $541 million. Net cash provided by operating activities in Q1 was $23.2 million, up from $16 million in the prior year period, driven primarily by improvements in working capital.
Carlos Doglioli: Contracts that got delayed are these.
Carlos Doglioli: Because of milestones warrant reach soon enough and revenue is being pushed to the right I just wanted to get a sense of your visibility on.
Speaker Change: That part of the business and maybe timing of one.
Carlos Doglioli: Those revenues get realized this year.
Speaker Change: Okay, great. Thanks, so the delays in the contracts will really delivery and construction delays so.
Carlos Doglioli: Some of these where do you are impacted by.
Carlos Doglioli: The weather events that happened in Q1, and some of these areas and some are due to some customer.
Carlos Doglioli: Our plan remains to strengthen our balance sheet and continue to expand that. Turning now to Capital Expenditures, Q1 CapEx was $36 million, net of $13.5 million of reimbursable capital expenditures.
Some changes in requirements from our customers.
Gregory John Burns: None of this is revenue loss. These are just dynamics that movies are to a degree.
Carlos Doglioli: And Dave you reflected guidance represents a schedule of that of that revenue move out from 'twenty four 'twenty five.
Carlos Doglioli: Okay.
Carlos Doglioli: And then.
Carlos Doglioli: In terms of the business service revenue trends that you were just.
Carlos Doglioli: This compares to $50.6 million net of $2.1 million in reimbursable capital expenditures for the prior year forward. For 2024, we are reducing our capex spending guidance compared with our original expectation. I will elaborate further during my outlook discussion. In Q1, we returned capital to our shareholders through $3.7 million in dividends and unaccounted $1,000 in repurchased shares.
Carlos Doglioli: Discussing there what was the.
Speaker Change: That's the reason why do you feel that you were not able to convert this year was it just pricing is more competitive.
Gregory John Burns: More more competition in those markets what was the main driver of the.
Carlos Doglioli: The lower win rates this year.
Speaker Change: Yes look I think it was a range of multiple factors. Yes. We were we had set up a program.
Gregory John Burns: To go after a pretty large pipeline and we had we had expected a better conversion rate.
Gregory John Burns: So I believe is multitude of factors Greg and.
Carlos Doglioli: The dynamic moving forward as we have an established pipeline we have.
Carlos Doglioli: Having completed the review of our results, I would like to expand further on our accelerated plan to capture additional cost savings in the year and better align our cost structure with our go-forward business. In my short time here at ATN, I have been closely assessing our businesses with an eye on how we can improve our profit margin to better align with industry benchmarks and increase returns to shareholders. Bringing a fresh perspective to this analysis has allowed us to identify several opportunities for capturing additional cost savings, from leveraging further efficiencies with common supplies to streamlining impacts.
Carlos Doglioli: Much of the 24 guidance includes our projects are actually in backlog.
Carlos Doglioli: There is an opportunity to accelerate we're working in detail with our markets to accelerate where we can bring circuit delivery.
Carlos Doglioli: So we can maximize revenue delivery for 24.
Gregory John Burns: And just so I'm clear. These these are government.
Carlos Doglioli: So government contracts that are awarded on annual basis. These arent like federal.
Brad: Grant funding.
Carlos Doglioli: Our programs so it's different.
Carlos Doglioli: Yes. These are these are enterprise contracts some of which are funded through different government.
Carlos Doglioli: Programs, but these are really enterprise programs within our markets.
Carlos Doglioli: Okay.
Carlos Doglioli: And then on the wireless side internationally, a little bit of a decline in the.
Carlos Doglioli: The prepaid subs is there any thing go.
Carlos Doglioli: Going on there in terms of.
Carlos Doglioli: The competitive dynamics within those markets why why did you see that decline this quarter.
Carlos Doglioli: Yes.
Carlos Doglioli: So thanks, Gregg on the international wireless subs.
Carlos Doglioli: There is additional competition.
Carlos Doglioli: Walter <unk> entrance in the market the movement in sequential quarter really is reflected in Guyana.
Carlos Doglioli: In light of current business dynamics, we're approaching this task with high urgency. While many changes will require careful planning and be implemented over time, we're preparing to take action as soon as operationally possible. It is our goal to start to derive benefits from some initiatives in the second half of 2024 and ensure our long-term financial success. With that, I will move on to our review of our 2024 guidance. Today, we're updating our full year 2024 outlook to reflect the impact of Q1 on our current expectations for the balance of the year.
Carlos Doglioli: And we have aggressive holiday campaign.
Carlos Doglioli: In that market.
Carlos Doglioli: In the prepaid market there was a churn was mostly attributed to.
Carlos Doglioli: Folks that didn't pop up that.
Carlos Doglioli: That moves in the December timeframe.
Speaker Change: Okay alright, thank you.
Carlos Doglioli: Thank you for your question.
Carlos Doglioli: Our next question comes from Kunal <unk>.
Dws Financial: Dws financial your line is open.
Carlos Doglioli: Hi.
Carlos Doglioli: Could you just talk about what your plans are as far as what you can do differently too.
Carlos Doglioli: <unk> some of the business that's lost.
Carlos Doglioli: Especially on the business side.
Carlos Doglioli: Yes, so Tom good morning, So there are a number of plans and activities and processing.
Carlos Doglioli: We have a robust pipeline that we've built.
Carlos Doglioli: There is.
Carlos Doglioli: A more standard profile of win rates and customer acquisition rate built into our forecast for 2024.
Carlos Doglioli: The company now expects revenue in the range of $730 to $750 million for the full year, down from our previous range of 750 to 770 million, adjusted EBITDA in the range of $190 to $200 million for the full year, down from the previous range of 200 to 208 million, and capital expenditures in the range of 100 to 110 million net of reimbursed amounts done from the prior range of 110 to 120 million as we balance decrease in operating capital. And lastly, we now expect to exit the year with a net debt ratio of 2.25 to 2.5, which compares to our prior target of 2.25 and 2.4 times.
Carlos Doglioli: And we are aggressively pursuing as I mentioned in the previous comment there is quite a bit of backlog that we just really need to convert over.
Carlos Doglioli: So there is a which impacts.
Carlos Doglioli: <unk> multiple segments, but we are aggressively going after.
Carlos Doglioli: The addressable pipeline, we are going after a backlog as of.
Carlos Doglioli: <unk> dot opportunities to be able to pull in revenues and 24. So we feel we feel confident in the guidance, we've given and we have a well risk adjusted pipeline.
Carlos Doglioli: Okay.
Speaker Change: My question is as well.
Carlos Doglioli: Sure.
Carlos Doglioli: Spending a lot of money, adding homes passed and so forth.
Speaker Change: Why is that not showing up as far as customers are concerned I mean, you brought.
Carlos Doglioli: Band customers went down sequentially.
Speaker Change: It seems like Youre, just wasting money at this point.
Carlos Doglioli: So so.
Speaker Change: On that point, Greg. So we have had very good success in the investments we've made in international markets and we've shown very good.
Carlos Doglioli: Rob and year over year sequential growth.
Carlos Doglioli: A dynamic that is in the numbers for this quarter. There was a significant amount of builds that took place in late 'twenty three and even into early 2024, and those are that's a pipeline and opportunity.
Carlos Doglioli: In the short term, we could see our net debt ratio move above that range due to working capital needs during the year driven by the timing of reimbursement. However, our objective remains to bring down leverage closer to due times over the medium term. Based on our current plan, we expect the cadence of adjusted EBITDA in 2024 to track closely with 2023, with over 50% of adjusted EBITDA in the second half of the year.
Carlos Doglioli: For a general companies to go after it.
Carlos Doglioli: Penetrate.
Carlos Doglioli: In our U S market, you mentioned, a pretty significant move more recently, so it really is an opportunity.
Carlos Doglioli: And we have to go execute on the commercial side to fill up that network.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you very much.
Carlos Doglioli: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Carlos Doglioli: Our next question comes from Robert Beauregard from Global Alpha Capital Management. Your line is open.
Carlos Doglioli: Finally, during my first few months with the company, I have been able to meet with our shareholders and visit with members of the ATN team across our market, giving me a great appreciation for what we make possible and the importance of our mission. We certainly have more work to do, but I'm confident that we're taking the steps necessary to position ATN to optimize our growth opportunities and deliver sustained value for shareholders. With that, I'll hand the call back over to Brad. [inaudible]
Bill: Mr. Bill regarding your line is open.
Carlos Doglioli: Okay.
Brad: Good morning Blair Carlos.
Brad: Good morning Carlos.
Carlos Doglioli: So.
Brad: But this is.
Brad: Clearly we had discussed.
Brad: When you when we last met.
Carlos Doglioli: This stock price in the extreme reaction to what really is.
Brad: A slight downward revision, but nothing broken about the business.
Brad: We're now selling at <unk> seven times tangible book.
Carlos Doglioli: Yes.
Brad: I mean, the market right now is not very kind to small cap illiquid stocks.
Brad: Are you seriously given thoughts to just prioritizing the company in embarking on a process to.
Brad W. Martin: We are committed to managing the business to deliver exceptional value to our shareholders, employees, customers, partners, and local communities. There's work to be done in the quarters ahead, but the leadership team and the board believe that we have the right strategy, team, and offerings in place to deliver on our plans for 2024. With that, operator, we'd like to open up the floor to questions.
Brad: Two to create shareholder value I mean, this is nice to say, but the stock is down from 80 Bucks through 'twenty.
Brad W. Martin: And.
Speaker Change: Clearly there is something that the market is so it doesn't have the patience for your.
Speaker Change: For your.
Brad W. Martin: For your building and the results will come later your fiber to glass.
Brad W. Martin: And steel strategy. So I mean, I think at this point you guys have to conduct.
Brad W. Martin: In all fairness to long term shareholders to conduct the process too.
Operator: Thank you. At this time, we will conduct the question and answer session. To withdraw your question, please press star 11 again. Our first question today comes from Rick Prentiss with Raymond James. Your line is open.
Brad W. Martin: To sell the company or a private.
Richard Hamilton Prentiss: Hey, Robert I'm looking to some kind of commitment that you will look.
Richard Hamilton Prentiss: At least and discuss it with the board that's why I'm on this conference call with with other analysts with.
Unknown Speaker: Okay, and then as far as visibility for the rest of the year, Carlos, you mentioned kind of a 60-40 split on EBITDA, but how confident are you and what gives you that confidence kind of to take the guidance to where it is now with the visibility given the U.S. economy and other items?
Richard Hamilton Prentiss: Over 7% of the stock.
Unknown Speaker: Robert This is Carlos so we appreciate your comments always yen.
Speaker Change: We'll take that.
Unknown Speaker: To the board and discuss it with them.
Speaker Change: Thank you Carlos because I guess.
Unknown Speaker: Like I said the market is just not kind to small cap it's nothing.
Unknown Speaker: It's the whole small cap complex.
Unknown Speaker: Thank you for your questions.
Unknown Speaker: Good morning. Could you just further elaborate on the dynamics within the carrier services? Contracts that got delayed. Are these...
Unknown Speaker: There's tons of money out there with private private equity and strategic buyers.
Unknown Speaker: These kind of multiples that discount to book tangible assets.
Speaker Change: I mean.
Unknown Speaker: None of this is revenue loss. These are just dynamics that move these out to a degree, and the reflected guidance represents the schedule of that revenue move out from 20 forward.
Speaker Change: You have to consider these options.
Speaker Change: Yes understood.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you for your call.
Speaker Change: Our final question today.
Unknown Speaker: From Ric Prentiss with Raymond James.
Speaker Change: Mr. <unk> your line is open.
Speaker Change: Thanks, Joe were going to ask the private private public question as well so glad that got asked I'll take my question then for the follow up.
Unknown Speaker: The lower win rate this year.
Unknown Speaker: So I believe it's a multitude of factors, Greg. And, you know, the dynamic moving forward is, you know, we have an established pipeline. Much of the 24 guidance includes projects that are actually in backlog. There is an opportunity to accelerate. We're working in detail with our markets to accelerate wherever we can, to bring circuit delivery in so we can maximize revenue delivery for 24.
Unknown Speaker: Brian can you help us understand operationally then.
Unknown Speaker: The backlog what has caused contracts to go into backlog what will allow them to get out of backlog and are producing isn't whether is it construction is it supply chain, what exactly is put items into backlog and what specifically, we will get them out of backlog.
Speaker Change: Yes, so Rick.
Unknown Speaker: There is a component of weather in the winter months in these markets we operate in rural Alaska.
Unknown Speaker: Alaska in the Rocky Mountains, as well and you.
Unknown Speaker: Margaret So so there is a dynamic that's coming into the true build season that will enable us more predictability.
Unknown Speaker: On delivery and we think there's an opportunity to accelerate.
Unknown Speaker: Grant funding
Operator: Our next question comes from Hamed Khorsand from BWS Financial. Your line is open.
Unknown Speaker: Yes.
Unknown Speaker: Dynamics.
Hamed Khorsand: Working with larger carriers.
Hamed Khorsand: So some movement some requirements can always we've put delays into into programs unexpectedly.
Hamed Khorsand: Hi, so first of all, could you just talk about what your plans are as far as what you look for and do differently to capture some of the business that's lost, especially on the business side?
Hamed Khorsand: But we are working diligently we have a good line of sight on all of this backlog and we do think there's opportunity to Paul was backlog again, that's reflected in our new guidance.
Hamed Khorsand: We will continue to work very hard to do that.
Hamed Khorsand: Okay is there is there anything your supply chain or labor, we're always looking to see obviously, we've come out of Covid, but theres still some lingering effects out there but is there anything.
Unknown Speaker: So we feel confident in the guidance we've given that we have a well risk adjusted portfolio.
Unknown Speaker: Specific besides the weather or other items that you'd call out or what's what's the long pole in the tent that has to be addressed by the slide deck.
Unknown Speaker: And my question is, as well as
Unknown Speaker: So, so.
Unknown Speaker: This stock price and the extreme reaction to what it really is. (inaudible) I mean, the market right now is not very kind to small cap liquid stocks. Are you seriously given thoughts to just privatizing the company and embarking on a process to sell the company or privatize it? I'm looking for some kind of commitment that you will look at, you know, at least and discuss it with the board. That's why I'm on this conference call with other analysts with, you know, over 7% of the stock.
Speaker Change: It's a great question. So no we are not seeing.
Unknown Speaker: Significant impacts on supply delays, it's something that has improved in certain areas. If it has not improved we have hedged.
Unknown Speaker: To ensure that we can deliver so there's really not supply or labor. So again, there are always dynamics with these large programs and we really need to make sure that when when we churn influence decisions to move things more quickly we are influencing doses.
Unknown Speaker: We've got a long experience of doing this we think there is an opportunity to really.
Unknown Speaker: We will continue to move this forward Unfortunately.
Unknown Speaker: Just the impact of <unk> 24, this there'll be revenue that shifted to 'twenty five.
Speaker Change: Okay, Alright, so it does feel like just.
Unknown Speaker: Our calendar year shift in.
Unknown Speaker: We should see stuff.
Unknown Speaker: On 25% how about longer term visibility on the business.
Unknown Speaker: Previous guidance had kind of given some some revenue thoughts on where the business could had.
Unknown Speaker: Thank you, Carlos, because this is Aga. Like I said, the market is just not trying to small cap, it's nothing, you know, ATN, it's the whole small cap complex. I mean, there's tons of money out there with private, private equity, and strategic buyers. I mean, you have to consider these options.
Unknown Speaker: I know you haven't done that today, but how comfortable are you on looking at kind of longer term trends in the business kind of the private prior question as well investors are trying to get a sense of visibility and growth.
Unknown Speaker: Small cap name.
Speaker Change: So it's a correct, yes, we haven't provided guidance beyond 24, and we would provide that here later in the year as well as some of our strategy beyond 'twenty four but really our strategy is to continue to deliver on.
Unknown Speaker: All of the investments we've made in the last couple of years.
Unknown Speaker: Thank you for your call. Our final question today is from Rick Prentiss with Raymond James. Mr. Prentiss, your line is open.
Richard Hamilton Prentiss: With our with our own self funded programs continue to expand upon those programs with government funded.
Richard Hamilton Prentiss: Activity, we mentioned in my prepared remarks, the $91 million and $23 million to $155 million 22 that was awarded these are programs being built now in 'twenty four 'twenty five into 2000, and that's a great foundation to move forward.
Unknown Speaker: But we are working diligently. We have a good line of sight on all this backlog, and we do think there's opportunity to pull this backlog in. That's reflected in our new guidance, and we'll continue to work very hard to do that.
Richard Hamilton Prentiss: Again, we really do like our strategy, we've got in our international markets market leadership positions in broadband, we've got gigabit solutions to 70% to 99% of all those markets <unk> networks rolled out.
Unknown Speaker: [inaudible]
Unknown Speaker: It's a great question. So, no, we are not seeing significant impacts on supply delays, something that has improved in certain areas. If it has not improved, we've hedged to ensure that we can deliver. So it's really not supply or labor. So, again, there are always dynamics with these large programs. And we really need to make sure that when we can influence decisions to move things more quickly, we are improving.
Richard Hamilton Prentiss: Really just in this conversion of this investment phase to moving into our free cash flow generation optimization base internationally and our U S markets. We've got again, a very strong foundation in carrier wholesale.
Unknown Speaker: Have a very large total total addressable market for telecommunications and the areas that we serve not really is the opportunity ahead of US building a good infrastructure, taking more of that total addressable share and our two U S market is a great opportunity and I think we've got Great Foundation strategy to do it we got to execute you have continued to focus on delivery.
Unknown Speaker: Right, so it does feel like just, you know, a calendar year shift, and we should see stuff on 25. But how about longer-term visibility on the business?
Unknown Speaker: To be able to deliver shareholder value and deliver value to our customers.
Unknown Speaker: Book value to all of our stakeholders.
Unknown Speaker: Great.
Speaker Change: Thanks, guys.
Unknown Speaker: I think I think when you look at the business.
Unknown Speaker: So, Rick, we haven't provided guidance beyond 24, and we will provide that here later in the year, as well as some of our strategy beyond 24. But really, our strategy is to continue to deliver on all of the investments we've made in the last couple of years with our own self-funded programs and continue to expand upon those programs with government-funded activities. We mentioned in my prepared remarks the $91 million in 23, and the $155 million in 22 that were awarded. These are programs being built now in 24, 25 into 26.
Speaker Change: We're transitioning.
Unknown Speaker: We've said, we're going to focus on cash.
Unknown Speaker: Cash generation and I think when you look at the level of Capex compared to prior years certainly.
Unknown Speaker: Along with that.
Unknown Speaker: So when you look at our financial framework transition, there's a couple of elements.
Unknown Speaker: That are already in place when you think about more the mid to long term, we talk about more normalized capex levels at between 10 and 15%.
Unknown Speaker: Of revenues.
Unknown Speaker: We've also signaled that from a longer term perspective, even though we're experiencing some bumps.
Unknown Speaker: Here and there with our leverage we're committed to bringing it bringing it closer to two times.
Unknown Speaker: Over time I think.
Unknown Speaker: When you look at those elements those are all pointing to gas generation down the road I think the other element that we have to.
Unknown Speaker: That's a great foundation to move forward. We have a very large total addressable market for telecommunications in the area. That really is the opportunity ahead of us. Building good infrastructure, and taking more of that total adjustable share in our two U.S. markets is a great opportunity. And I think we've got a great foundation strategy to do it. Now, we just have to execute. We have to continue to focus on delivery to be able to deliver shareholder value, deliver value to our customers, and overall value to all of our stakeholders. Ray.
Unknown Speaker: Complete.
Ray: Is the piece of the of the margins.
Ray: Yes, and thats going to be the focus for the coming for the coming months.
Ray: As I mentioned in my remarks, I've been closely focused on margin improvement opportunity.
Ray: We're currently yes.
Unknown Speaker: <unk>.
Unknown Speaker: Adjusted EBITDA, So theres certainly room for improvement there.
Ray: And we all understand that.
Unknown Speaker: There is short term opportunities there are things that might take a little more time.
Ray: There is.
Unknown Speaker: Room there.
Unknown Speaker: And.
Ray: Got it.
Ray: That's where we're going to find additional financial strength.
Unknown Speaker: I just want to add, you know, I think, you know, when you look at the business, and that's where we're going to find the additional financial strength to improve the return to shareholders. It's critical.
Unknown Speaker: To improve those returns to shareholders it's critical.
Speaker Change: Alright, and to Echo Robert's comments from earlier, but it's not just small cap illiquid names like AT&T, Comcast down, 7% and actually the large cap companies are having a tough time in the public markets right now.
Unknown Speaker: When there is competition on <unk>.
Unknown Speaker: <unk>.
Unknown Speaker: Some delays and stuff so okay wish you well.
Ray: Glad you're focusing on the margins as well as the free cash flow. Thanks, guys.
Brad W. Martin: Thank you very much. This concludes our question and answer session. I would now like to turn it back to Brad Martin for closing remarks.
Ray: Thank you Greg.
Unknown Speaker: Thank you very much. This concludes our question and answer session I would now like to turn it back to Brad Martin for closing remarks.
Brad W. Martin: Thank you all for joining today, we look forward to speaking many of you in the months ahead. Thank you again for your time.
Brad W. Martin: Hey, Gary.
Brad W. Martin: Thank you for your participation in today's conference. This does conclude the program you may now disconnect have a good day.
Brad W. Martin: Okay.
Brad W. Martin: [music].
Brad W. Martin: Okay.
Brad W. Martin: Yeah.
Brad W. Martin: Okay.
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Brad W. Martin: Yes.
Brad W. Martin: Okay.
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Brad W. Martin: Yes.
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