Q1 2024 Cable One Inc Earnings Call
Hello, and thank you for standing by my name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the cable one first quarter 'twenty 'twenty four earnings conference call. All lines have been placed on mute to prevent any background noise.
Operator: Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cable ONE First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.
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 star, then the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Vice President of Investor Relations, Jordan Morkert. Please go ahead.
Speaker Change: After the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press Star then the number one on your telephone keypad. If you would like to withdraw your question Press Star One again I would now like to turn the conference over to Vice President of Investor Relations Jordan Mark Quinn. Please go ahead.
Jordan Morkert: Good afternoon, and welcome to Cable ONE's first quarter 2024 earnings call. We're glad to have you join us as we review our results.
Jordan Morkert: Good afternoon, and welcome to cable one's first quarter 2024 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 uncertainties, including statements regarding future customer growth.
Jordan Morkert: 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 uncertainties, including statements regarding future customer growth, changes in ARPU, finance or performance, capital allocation, dividend policy, leverage ratios, and financing plans. 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 obligation, except as required by law, to update or alter its forward-looking statements, whether as a result of new information, future events, or
Jordan Morkert: <unk> and <unk> financial performance capital allocation dividend policy leverage ratios and financing plans.
Jordan Morkert: 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 and today's earnings release and in our SEC filings, including our annual report on Form 10-K.
Jordan Morkert: Cable one is under no obligation and expressly disclaims any obligation except as required by law to update or alter its forward looking statements, whether as a result of new information future events or otherwise. Additionally.
Jordan Morkert: 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. For example, when we refer to free cash flow during today's call, we mean adjusted EBITDA less capital expenditures as defined in our earnings release. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release on our website at ir.cableone.net. Joining me on today's call is our President and CEO, Julia Laulis, and Todd Koetje, our CFO. With that, let me turn the call over to you.
Jordan Morkert: 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, when we refer to free cash flow during today's call. We mean adjusted EBITDA less capital expenditures as defined in our earnings release reckon.
Jordan Morkert: Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release on our website at IR Cableone Dot net.
Julia M. Laulis: Joining me on today's call is our president and CEO, Julie Lewis and Todd <unk>, our CFO with that let me turn the call over to Joe.
Julia M. Laulis: Thank you, Jordan, and good afternoon, everyone. We appreciate you joining us on today's call. Our first quarter results reflect continued momentum in residential broadband customer growth and the early proof of our focused efforts aimed at attracting a new cohort of customers. The initial results of this approach lead us to believe that we are on the right strategic path to create additional value in the future. Today, before turning the call over to Todd for a full review of our financial performance, I'm going to touch on three main topics.
Julia M. Laulis: Thank you Jordan and good afternoon, everyone. We appreciate you joining us for today's call. Our first quarter results reflect continued momentum in residential broadband customer growth sustained free cash flow growth and the early fruits of our focused efforts aimed at attracting a new cohort of customers.
Julia M. Laulis: Results of this approach led us to believe that we are in the right strategic path.
Julia M. Laulis: Create additional value in the future.
Julia M. Laulis: The day before turning the call over to Todd for a full review of our financial performance I'm going to touch on three main topics.
Julia M. Laulis: I'll discuss residential broadband growth, both our historical approach and the current marketplace, as well as factors influencing our near-term performance that lay the foundation for sustained long-term growth; our network, which serves as the fundamental driver of our growth and efficiency, not only today but as a cornerstone of our future success, and three, the continued strong performance of our investment partnerships, including Mega Broadband. First, residential broadband service.
Julia M. Laulis: One I'll discuss residential broadband growth.
Julia M. Laulis: Our historical approach and the current marketplace as well as factors influencing our near term performance that lay the foundation for sustained long term growth.
Julia M. Laulis: To our network, which serves as the fundamental driver of our growth and efficiency not only today, but as a cornerstone of our future success.
Julia M. Laulis: And three the continued strong performance of our investment partnerships, including Mega broadband.
Julia M. Laulis: Our past strategy, focusing on high lifetime value customers, enabled us to streamline operations and marketing efforts, leading to tremendous growth of HSD revenues, EBITDA, and free cash flow by attracting higher ARPU customers, albeit at a lower overall penetration level. We are now navigating a marketplace characterized by low move activity, the emergence of new fixed wireless competitors targeting value-conscious customers, a segment we had not previously targeted, and a rise in additional fiber competitors in select markets.
Julia M. Laulis: First residential broadband service.
Julia M. Laulis: <unk> strategy, focusing on high lifetime value customers enabled us to streamline operations and marketing efforts, leading to tremendous growth of HFC revenues, EBITDA and free cash flow by attracting a higher RFU customer, albeit at a lower overall penetration level.
Julia M. Laulis: We are now navigating a marketplace characterized by low move activity the emergence of new fixed wireless competitors targeting value conscious customers. A segment, we had not previously targeted and a rise in additional fiber competitors in select markets.
Julia M. Laulis: Growth is essential for any successful business, and at Cabo, we are using multiple levers to help us achieve it. Unlike most of its peers, Cable ONE grew its residential subscriber base this quarter, adding approximately 6,900 new customers sequentially.
Julia M. Laulis: Growth is essential for any successful business in a combo, we are using multiple levers to help us achieve it.
Julia M. Laulis: Unlike most of our peers cable one grew its residential subscriber base this quarter, adding approximately 6900 new customers sequentially.
Julia M. Laulis: Since the fall of 2023, our focus on expanding market penetration has yielded tangible results even amidst increasing competition. Our approach has led to both an increase in connectivity and a further reduction in churn, demonstrating not only our resilience against competitive pressures but also high levels of customer satisfaction. Moreover, our substantial network capacity and growing percentage of self-installations allow us to onboard these new customers more efficiently and profitably. Our competitive strategy extends beyond price.
Julia M. Laulis: Since the fall of 2023, our focus on expanding market penetration has yielded tangible results.
Julia M. Laulis: Even at mixed increasing competition.
Julia M. Laulis: Our approach has led to both an increase in connect and a further reduction in churn demonstrating not only our resilience against competitive pressures, but also high levels of customer satisfaction.
Julia M. Laulis: Moreover, our substantial network capacity and growing percentage of self installations allow us to onboard these new customers more efficiently and profitably.
Julia M. Laulis: Our competitive strategy extends beyond price for example, as we deploy our wall to wall Wi Fi solution across our footprint, we gained substantial insight into our customers' end to end service experience.
Julia M. Laulis: For example, as we deploy our wall-to-wall Wi-Fi solution across our footprint, we gain substantial insight into our customers' end-to-end service experience. Based on these insights, our internal engineers developed a platform that enables us to monitor external network interference, power levels, and other potential technical concerns, allowing us to proactively identify and address potential issues or necessary enhancements.
Julia M. Laulis: Based on these insights are internal engineers developed a platform that enables us to monitor external network interference.
Julia M. Laulis: <unk> levels and other potential technical concerns, allowing us to proactively identify and address potential issues or necessary enhancements.
Julia M. Laulis: This capability to assess problematic areas empowers us to target our efforts prioritizing our resources where they'll have the greatest positive impact on customer experience. By responding aggressively to certain competitors and retooling our go-to-market approaches to protect our customer base and attract new value customer segments, we have grown customers for eight straight months and bent customer growth trends in our favor in some of our most competitive markets. We are encouraged by these results, and now that this work is behind us, our sights are set on trialing different tactics and defending against new competitors on an as-needed basis.
Julia M. Laulis: Capability to assess problematic areas empowers us to target our efforts.
Julia M. Laulis: <unk>, our resources, where they will have the greatest positive impact on customer experience.
Julia M. Laulis: By responding aggressively to certain competitors and retooling our go to market approaches to protect our customer base and attract new value customer segments, we have grown customers for eight straight months and customer growth trends in our favor and some of our most competitive markets.
Julia M. Laulis: We are encouraged by these results and now with this work behind US our sights are set on trailing different tactics of defending against new competitors on an as needed basis.
Julia M. Laulis: We believe that expanding our market share and growing customers ultimately sets us up for positive financial performance over the long term. While ARPU this quarter declined as expected, we believe this decline will improve as we round the corner on the activities I just described. We are confident in our trajectory moving forward.
Julia M. Laulis: We believe that expanding our market share and growing customers ultimately sets us up for positive financial performance over the long term.
Julia M. Laulis: While our two this quarter declined as expected. We believe this decline will ameliorate as we round the corner on the activities I just described.
Julia M. Laulis: We are confident in our trajectory moving forward.
Julia M. Laulis: Now shifting to our network will delve into our ability to deliver the next generation of speed and service offerings alongside our ongoing investments to enhance service delivery.
Julia M. Laulis: Adapting to our network, I'll delve into our ability to deliver the next generation of speed and service offerings alongside our ongoing investments to enhance service delivery. We are proud to have invested more than $1 billion in our network infrastructure over the last three years. These investments allow us to not only meet, but to anticipate and exceed our customers' evolving needs for superior reliability and performance. This strategic focus includes enhancing reliability within homes and across individual devices where the large majority of customer issues occur regardless of whether the service is delivered via fiber or HFC.
Julia M. Laulis: We are proud to have invested more than $1 billion in our network infrastructure just over the last three years.
Julia M. Laulis: These investments allow us to not only meet but to anticipate and exceed our customers' evolving needs for superior reliability and performance.
Julia M. Laulis: This strategic focus includes enhancing reliability within homes and across individual devices with a large majority of customer issues occur.
Julia M. Laulis: Guard list of whether the services delivered via fiber or HFC.
Julia M. Laulis: As a result, we have seen a notable improvement in customer satisfaction. We continue to invest in our network so that we can roll out DOCSIS 4.0 and 10-gigabit speed offerings and stay well ahead of customer data demand, which continues to grow at an extraordinary rate. In fact, our customers' monthly average usage has more than tripled in the past five years. Despite this growth, our network maintained a stable utilization rate of around 20% for both downstream and upstream traffic during peak hours this quarter.
Julia M. Laulis: As a result, we have seen a notable improvement in customer satisfaction.
Julia M. Laulis: We continue to invest in our network. So that we can roll out DOCSIS forked auto and 10 gigabit speed offerings and stay well ahead of the customer data demand, which continues to grow at an extraordinary rate in fact, our customers monthly average usage has more than tripled in the past five years.
Julia M. Laulis: Despite this growth our network maintained a stable utilization rate of around 20% for both downstream and upstream traffic during peak hours this quarter.
Julia M. Laulis: This proactive investment mindset to build excess network capacity positions us to optimize capital spending supporting both superior network performance and sustained free cash flow growth.
Julia M. Laulis: This proactive investment mindset to build excess network capacity positions us to optimize capital spending, supporting both superior network performance and sustained free cash flow growth. Over the past year, we've been directing investments into software platforms that serve as catalysts for digital transformation. These platforms are reshaping our operations and enhancing the customer experience by enabling advanced automation and making our service delivery more efficient. One such example is the consolidation of our current billing technology onto a single platform.
Julia M. Laulis: Over the past year, we've been directing investments into software platforms that serve as catalysts for digital transformation.
Julia M. Laulis: These platforms are reshaping, our operations and enhancing the customer experience by enabling advanced automation and making our service delivery more efficient.
Julia M. Laulis: One such example is the consolidation of our current billing technology onto a single platform.
Julia M. Laulis: Work is currently underway on this significant milestone, and we plan to have it completed within the next 12 months. This will streamline operations for associates and customers while expediting product launches and enabling us to go to market as one Sparklight brand. This process will also allow us to retire more than 30 disparate software platforms across our brands, drastically simplifying our technological infrastructure, which we expect to result in several million dollars of annual savings.
Julia M. Laulis: Work is currently underway on this significant milestone we plan to have it completed within the next 12 months.
Julia M. Laulis: This will streamline operations for associates and customers, while expediting product launches and enabling us to go to market as one spark white brand.
Julia M. Laulis: This process will also allow us to retire more than 30 disparate software platforms across our brands drastically simplifying our technological infrastructure, which we expect to result in several millions of dollars of annual savings.
Julia M. Laulis: Turning to our investment partnerships today, we posted some additional information regarding the companies we have invested in on our Investor Relations website.
Julia M. Laulis: Turning to our investment partnership, today, we posted some additional information regarding the companies we have invested in on our Investor Relations website. The aggregate fourth quarter annualized 2023 adjusted EBITDA of select companies in our investment portfolio was $613 million.
Julia M. Laulis: This represents growth of 24% when compared to annualized fourth quarter 2022 adjusted EBITDA of these companies. Additionally, these companies collectively grew broadband subscribers by 11% and added over 330,000 new fiber passes during 2023. Continuing this positive trend into the first quarter, their total number of residential and business data customers increased by roughly 20,600, or 2.5% sequentially. It's important to note that these figures do not include the operations of Metronet, in which our investment is relatively small.
Julia M. Laulis: The aggregate fourth quarter annualized 2023, adjusted EBITDA of select companies in our investment portfolio was $613 million. This represents growth of 24% when compared to annualized fourth quarter 2022, adjusted EBITDA of these companies.
Julia M. Laulis: Additionally, these companies collectively grew broadband subscribers by 11% and added over 330000, new fiber postings during 2023.
Julia M. Laulis: Continuing this positive trend into the first quarter. The total number of residential and business data customers increased by roughly 20600 or two 5% sequentially.
Julia M. Laulis: It is important to note that these figures do not include the operations of Metronet in which our investment is relatively small.
Julia M. Laulis: This performance underscores the effective execution by the seasoned management teams we chose to partner with and why we believe in the substantial value and potential future growth of these companies. We are also asked about the future of our investment in mega broadband investments, also known as MBI, and the potential for us to acquire the remaining 55% stake in the company. Let me explain why we believe MDI is a great partner for us.
Julia M. Laulis: This performance underscores the effective execution by the seasons management teams, we chose to partner with and why we believe in the substantial value and potential future growth of these companies.
Julia M. Laulis: We are also asked about the future of our investment in Mega broadband investments also known as MDI and the potential for us to acquire the remaining 55% stake in the company.
Julia M. Laulis: Let me explain why we believe MDI is a great partner for us.
Julia M. Laulis: First, they are performing well financially, with annualized Q4 2023 revenues of approximately $320 million and a double-digit EBITDA growth rate when comparing LQA Q4 2022 to LQA Q4 2023, thanks in part to continued growth in both broadband customers and our. They also have a loyal customer base of approximately 230,000 residential and business broadband customers in a network that covers about 665,000 premises as of December 31st, 2023. Finally, and very importantly, they have a strong management team that shares our vision and values.
Julia M. Laulis: First they are performing well financially with annualized Q4, 2023 revenues of approximately $320 million and a double digit EBITDA growth rate when comparing L. QA Q4, 2022 to <unk> Q4 2023.
Julia M. Laulis: In part to continued growth in both broadband customers and <unk>.
Julia M. Laulis: I also have a loyal customer base of approximately 230000 residential and business broadband customers and a network that covers about 665000 pass things as of December 31, 2023.
Julia M. Laulis: Finally, and very importantly, they have a strong management team that shares our vision and values.
Julia M. Laulis: If we do acquire the remaining stake in MBI, we are confident in our ability to efficiently integrate them, gaining cost and tax efficiency. Our active participation on their board, coupled with a robust network and a shared culture of delivering high-quality service to customers, underpins this deal. In sum, we continue to value MBI for all the reasons that first drew us to them. Their strong growth in less competitive rural markets, impressive potential for future growth, and exceptional leadership team.
Julia M. Laulis: If we do acquire the remaining stake in MDI, we're confident in our ability to efficiently integrate them gaining cost and tax efficiencies are active participation on their board coupled with a robust network and a shared culture of delivering high quality service to customers underpins this confidence.
Julia M. Laulis: In sum, we continue to value MDI for all the reasons that first drew us to them their strong growth and less competitive rural markets impressive potential for future growth and exceptional leadership team.
Julia M. Laulis: To sum up our performance in the first quarter of 2024 aligns with our long term objectives, reflecting residential broadband customer growth and the benefits of past capital investments. We've made in our network, allowing us to continue to generate strong free cash flow.
Julia M. Laulis: To sum up, our performance in the first quarter of 2024 aligns with our long-term objectives, reflecting residential broadband customer growth and the benefits of past capital investments we have made in our network, allowing us to continue to generate strong free cash flow. With conviction in our strategic direction and the capability of our team, we are poised to sustain this momentum and realize our objectives for the remainder of this year. Looking ahead, we are focused on leveraging these achievements to drive sustainable EBITDA and revenue growth over the long term. And now, Todd, who will provide a recap of our first quarter financial performance.
Todd: With conviction in our strategic direction and the capability of our team we are poised to sustain this momentum and realize our objectives for the remainder of this year.
Todd: Looking ahead, we are focused on leveraging these achievements.
Todd: Drive sustainable EBITDA and revenue growth over the long term.
Julia M. Laulis: And now Todd who will provide a recap of our first quarter financial performance.
Todd M. Koetje: Thanks, Julie. Starting off with revenues for the 1st quarter of 2024, our total revenues were $404.3 million, compared to $421.9 million in the 1st quarter of 2023. This decline is primarily driven by losses in video subscribers as we continue to navigate the final phase of our video product lifecycle. Year-over-year, residential video revenues decreased to $9.9 million, or $14.1 billion. Residential data revenues decreased $6.9 million, or 2.8% year-over-year, driven by a 2.7% decrease in average revenue per year. However, as Julie noted, residential data subscribers grew by 6,900 sequentially, expanding on the growth experienced in the fourth quarter of last year.
Todd: Thanks, Julien starting off in revenues for the first quarter of 2024, our total revenues were $404 3 million.
Todd M. Koetje: Compared to $421 9 million.
Todd M. Koetje: In the first quarter of 2023. This decline is primarily driven by losses in video subscribers as we continue to navigate the final phase of our video product lifecycle.
Todd M. Koetje: Year over year residential video revenues decreased to $9 9 million or.
Todd M. Koetje: Were 14, 1%.
Todd M. Koetje: Residential data revenues decreased $6 9 million or two 8% year over year, driven by a two 7% decrease in average revenue per unit.
Todd M. Koetje: However, as Julie noted residential data subscribers grew by 6900 sequentially expanding on the growth experienced in the fourth quarter of last year.
Todd M. Koetje: On the business services side, starting this quarter, we are now breaking out data revenues separately given this product's very different growth profile as compared to business video and voice services. In the first quarter of 2024, business data revenues grew by over $2 million, or 3.7% compared to Q1 of 2023. Operating expenses were $106.5 million, or 26.3% of revenues, in the first quarter of 2024 compared to $112.2 million, or 26.6% of revenues, in the prior year quarter, a 30 basis point improvement driven largely by a $9.2 million decrease in programming costs.
Todd M. Koetje: On the business services side.
Todd M. Koetje: This quarter, we are now breaking out data revenues separately, given this products very different growth profile as compared to business video and voice services.
Todd M. Koetje: So the first quarter of 2020 for business data revenues grew by over $2 million or three 7% compared to Q1 of 2023.
Todd M. Koetje: Operating expenses were $106 $5 million or 26, 3% of revenues in the first quarter of 2024 compared to $112 $2 million or 26, 6% of revenues in the prior year quarter.
Todd M. Koetje: <unk> 30 basis point improvement driven largely by a $9 $2 million decrease in programming costs.
Todd M. Koetje: Telling, General, and Administrative expenses were $90.4 million for the first quarter of 2024, compared to $86.7 million in the prior year quarter. S&A as a percentage of revenue was 22.4% for Q1 of 2024 compared to 20.6% for Q1 of 2023, with the increase driven by additional investments in marketing to attract new value segments and platform enhancements facilitating digital transformation. Net income was $47.3 million for the first quarter of 2024 compared to $57.4 million for the first quarter of 2020.
Todd M. Koetje: SG&A as a percentage of revenue was 22, 4% for Q1 of 2024 compared to 26% for Q1 of 2023 would be increased driven by additional investments in marketing to attract new value segments and platform enhancements facilitating digital transformation.
Todd M. Koetje: Net income was $47 $3 million for the first quarter of 2024 compared to $57 4 million in the first quarter of 2023.
Todd M. Koetje: The prior year quarter benefited from a $12.3 million non-cash mark-to-market gain on one of our equity investments. Suggested EBITDA was $217.1 million for Q1 2024, representing a 53.7% margin, compared to $228.8 million, a 54.2% margin, in the year-ago quarter. As residential data subscriber growth was outpaced by continued attrition in our video business, a decrease in residential data ARPU, and the aforementioned incremental costs associated with long-term investments in customer growth platforms.
Todd M. Koetje: Prior year quarter benefited from a $12 $3 million noncash mark to market gain on one of our equity investments.
Todd M. Koetje: Capital expenditures of $65.9 million in Q1 were $30.2 million, or 31.4% lower than in Q1 of last year. During the quarter, we invested $15.9 million in CapEx for new market expansion projects and $4.4 million for integration. The reduced level of capital expenditure during Q1 was largely due to the execution of our working capital optimization initiatives and a continued benefit associated with prior proactive investments in our network architecture. We continue to expect total cutbacks for the year to trend toward the low $300 million for the full year.
Todd M. Koetje: Adjusted EBITDA left capital expenditures increased $18.5 million, or 13.9%, to $151.2 million in the first quarter of 2020. We will continuously assess the optimal allocation of the significant cash flow generated by our business, maintaining a highly disciplined commitment to long-term investment strategies and conservative financial management. Our focus remains on four key areas.
Todd M. Koetje: Enhancing network and platform infrastructure, capitalizing on organic growth opportunities within our existing markets, Strategic Inorganic Growth Strategies, both investments and through acquisitions, in a diversified capital return strategy, which predominantly entails regular dividends, Disciplined Debt Repayment, and Opportunistic Share Repurchase. In Q1, we distributed $16.8 million in dividends to shareholders and repaid $54.8 million of debt, of which $50 million represented a voluntary repayment on our outstanding revolvers. As of March 31st, we had approximately $211 million of cash and cash equivalents on hand, and our debt balance was approximately $3.6 billion, consisting of approximately $1.8 billion in term loans.
Todd M. Koetje: 920 million in convertible notes, $650,000,000 in unsecured notes, $288,000,000 of revolver borrowings, and $5,000,000 of finance lease liability. We also had $712 million available for additional borrowings under our $1 billion Committed Revolving Credit Facility as of March 31st. Additionally, earlier this week, we voluntarily repaid an additional $50 million of debt under our revolving credit facility, continuing our commitment to disciplined debt reduction. Our weighted average cost of debt for the first quarter of 2024 was 4.25 percent, our net leverage ratio on a last quarter annualized basis was 3.9 times, and the large majority of our borrowings are either fixed issuance or have been synthetically fixed at underlying base rates that are approximately half of the prevailing floating rate. Additionally, the nearest final maturity for any of our debt instruments, our $575 million of 0.0% convertible notes, does not occur until 20
Todd M. Koetje: We are confident in our ability to maintain our leverage within a targeted range of two and a half to four and a half times should we acquire MBI via the put up. Additionally, given the available capacity under our evolving credit agreement, the consistent pre-cash flow generation from both companies, and the portability of existing MBI credit facilities. We believe that we are well prepared to potentially complete the transaction without accessing the markets for additional incremental capital. However, we will remain opportunistic in evaluating attractive windows in the capital market.
Todd M. Koetje: Before we open the floor to questions, I'd like to share an update on the Affordable Connectivity Program, or ACP. Despite the requirement to stop adding new ACP customers after February 7th due to the program's wind-down, we achieved growth in overall residential broadband subscribers each month this quarter. It's important to note that among our roughly 48,000 ACP subscribers, approximately 20% are fully dependent on ACP funding for their service. Although we anticipate some customer losses, this transition also offers an opportunity to attract new customers. With that, we are now ready for questions.
Operator: At this time, I'd like to remind everyone that in order to ask a question, simply press star followed by the number one on your telephone keypad. Our first question will come from the line of Sebastiano Petty with J.P. Morgan. Please go ahead.
Sebastiano Carmine Petti: Hi, thank you for taking the question. If I could just ask a quick, perhaps housekeeping question, Julie, on your comments about believing that ARPU declines will ameliorate once you turn the corner.
Sebastiano Carmine Petti: Is that implied, you know, as you kind of lapped the four Qs kind of impact? Or are you trying to be explicit in your timing there of that? I apologize for the specific question there. And then, just related to residential broadband ARPU, how should we be thinking about the, you know, dilutive impacts of the new strategy and what that could mean for, you know, broadband ARPU as we, you know, trend over the course of the year?
Sebastiano Carmine Petti: Obviously, you know, eventually we'll, you know, rebound here, but any risk perhaps you're thinking about, you know, to the back book? And then I think you did also make a comment in your prepared remarks that... You may be in a position to, I think, test new offers or try to go after new competitors or trial new offers. Any other additional color around that would be helpful as well. Thank you so much.
Julia M. Laulis: Okay, that was a mouthful. I'm going to see if I can get your questions answered in order.
Julia M. Laulis: Yeah.
Julia M. Laulis: Let's step back even a little bit further in the past, we I think have been well known for going after a high lifetime value customer.
Julia M. Laulis: So ARPU declines amelioration. What I'm referring to there is, in the fall of 23, we, you, well, let's step back even a little bit further. In the past, we, I think, have been well known for going after a high lifetime value customer, and that resulted in lower penetration than our peers but a higher ARPU than our peers overall. The business environment is a lot different now with, you know, fewer moves and new competitors, both wired and wireless.
Julia M. Laulis: And that.
Julia M. Laulis: That resulted in a lower penetration than our peers, but a higher <unk> than our peers overall.
Julia M. Laulis: The business.
Julia M. Laulis: Business environment is a lot different now with less moves and new competitors.
Julia M. Laulis: Both wired and wireless.
Julia M. Laulis: And so in the fall of 23, we made a move to go aggressively against certain competitors and retool our go-to-market approaches to different customer segments, basically all customer segments, concentrating on high LTV values. And there are a lot of reasons for that.
Julia M. Laulis: And so in the fall of 'twenty three we made a move to go aggressively against certain competitors and retool our go to market go to market approaches.
Julia M. Laulis: Two different customer segments, basically all customer segments versus <unk>.
Julia M. Laulis: Concentrating on high LTV value and there are a lot of reasons for that first of all you have to have customers in order to have a business, but also there are ways to.
Julia M. Laulis: I mean, first of all, you have to have customers in order to have a business, but also, there are ways to bring in a similar margin or value from value-conscious customers in today's day and age with different platforms and tools, machine learning, et cetera, et cetera. So we responded decisively against competition in the fall, and we began trialing and experimenting with many different promos and retention efforts, and R Pooh drop.
Julia M. Laulis: Bring in a similar margin or value from value conscious customers in today's day and age with different platforms and tools machine learning et cetera et cetera.
Julia M. Laulis: So we responded decisively.
Julia M. Laulis: Against competition in the fall and we began trialing and experimenting with many different.
Julia M. Laulis: <unk> and retention efforts and RP dropped.
Julia M. Laulis: But we also learned which tactics worked and which ones didn't, and I think we feel really good that we have grown in the face of increasing competition in our marketplace. And we're seeing growth in all segments as we define them. That is to say, even in our highly competitive markets, we are winning against DSL was winning against fiber, we are winning against big fiber, against independent fiber. The growth is the piece that gives us confidence.
Julia M. Laulis: But we also learned which tactics work and which ones didn't.
Julia M. Laulis: And I think we feel really good that we have grown in the face of increasing competition.
Julia M. Laulis: The growth is the piece that gives us confidence now in terms of the <unk>.
Julia M. Laulis: Now, in terms of the ARPU, I think of this maybe simplistically as like a person walking across a seesaw, and you're trying not to have it tilt one way or the other, but we knew we were going to cause that tilt in our. And the only thing that
Julia M. Laulis: I don't you know that I think we need to titrate is that we take our learnings and put them to use now. Now we know what works and what to do. So in Q4 and Q1, you saw the results of the things that I just talked about. Now we know more, we know better, and we're going to do better. I think we have a lot of puts and takes going on in our. If you look year over year, the largest RQ drop is attributable to competitive pressure responses in a fused system, but offsetting that was a positive impact of customers migrating to higher tiers. They're still doing that, but customers are choosing.
Julia M. Laulis: They are choosing, of their own volition, higher-speed packages. Now that was blunted by us taking some items that we charged for previously, like usage-based billing or unlimited data, going away. But I feel good about that because those items are high-value items for higher ARPU prices overall, so I think that positions us well for the future. Then you have things like rate card adjustments, rate increases, if you will, and that's also a positive impact year over year, but it's being offset again year over year by promos and value-conscious rates.
Julia M. Laulis: But those things, both of those things... can become net positives over time. This is about the setup for the future, promos roll off, and you can adjust prices. So hopefully that gives you a little color on ARPU.
Julia M. Laulis: In terms of trials for the future, what I'm saying is, we are not done with anything that we're doing. We're going to continue to experiment and innovate. And it's actually one of the things I'm most proud of the group for having a more agile mindset and responding much more quickly and open-mindedly to things that are worth trying in order to ultimately deliver the best product, the best price, and the best experience for our customers.
Julia M. Laulis: In order to ultimately deliver the best products the best.
Julia M. Laulis: Price the best experience for our customers.
Speaker Change: Got it thank you.
Speaker Change: Youre welcome.
Julia M. Laulis: Your next question comes from the line of Brandon <unk> with Keybanc capital markets. Please go ahead.
Operator: Your next question comes from the line of Brandon Nispel with KeyBank Capital Markets. Please go ahead.
Brandon Lee Nispel: Okay, I'm going to ask one along the same lines Julie the way that I sort of thought about what you guys are doing from a go to market perspective is there sort of an economic curve between <unk> penetration and so in a hypothetical scenario where youre. Our foods are allowed you allow them to go down to 70 to $75.
Brandon Lee Nispel: Hey, I'm going to ask one along the same lines. Julie, the way that I sort of thought about what you guys are doing from a go-to-market perspective is that there's sort of an economic curve between ARPUs and penetration. And so, you know, in a hypothetical scenario where your ARPUs, you know, you allow them to go down to $70 to $75 a month, what should investors expect your penetration rates to be? And then you mentioned growing subscribers for eight months in a row. Are you seeing those trends start to accelerate from some of the go-to-market efforts that you're making? Thanks.
Brandon Lee Nispel: A month.
Brandon Lee Nispel: Should investors expect your penetration rates to be and then you had mentioned youre growing subs for eight months in a row are you seeing.
Brandon Lee Nispel: Those trends start to accelerate from some of the go to market efforts that youre, making thanks.
Brandon Lee Nispel: Okay.
Brandon Lee Nispel: Okay.
Julia M. Laulis: Accelerate, yes, the first quarter was stronger than the fourth quarter, and the thing about that is that it was because of Connect and So, people have been talking about churn for a while now, and our churn is super low, and it's dropped in half in some of the most highly competitive marketplaces that say what we're doing is working. So what else was I talking about?
Brandon Lee Nispel: Accelerate.
Julia M. Laulis: Yes, the first quarter was stronger than the fourth quarter.
Julia M. Laulis: In the us.
Julia M. Laulis: Thing about that is that it was because of connects and churn.
Julia M. Laulis: So people have been talking about churn for a while now and our churn is super low.
Julia M. Laulis: And it's dropped in half.
Julia M. Laulis: Some of the most highly competitive marketplaces, let's say, what we're doing is working.
Julia M. Laulis:
Julia M. Laulis: So.
Julia M. Laulis: What else is I talked about the connect they are depending on where you are talking about because again our systems are not monolithic, they're all over the place but anywhere from single digits to double digit increases in connects happened during the first quarter and honestly, we haven't seen connect activity like that since 2020.
Julia M. Laulis: Oh, yeah, the connects. They are up, depending on where you're talking about because again, our systems are not monolithic. They're all over the place. But anywhere from single digit to double digit increases in connect activity happened during the first quarter. And honestly, we haven't seen connect activity like that since 2020.
Julia M. Laulis: So, yes on the acceleration. Let's see, what else did you ask about? Penetration rate. And I don't think we say exactly where we think we're going to end up, but I think it would be reasonable to suggest that somewhere around where you see the other guys, the other big guys hanging is reasonable. Not exactly the same because our market demographics are a little bit different, but similar.
Julia M. Laulis: So yeah.
Julia M. Laulis: Yes on the acceleration.
Julia M. Laulis: See what else did you ask about penetration rate and I don't think we say exactly where we think we're going to end up but I think it would be reasonable to suggest that somewhere around where you see.
Julia M. Laulis: The other the other guys. The other big guys hanging is reasonable not exactly the same because our market demographics are a little bit different but.
Julia M. Laulis: Sure.
Todd M. Koetje: Brandon, this is Todd. As we've discussed in the past and discussed, broadly at 35% now versus many in the peer group in the high 40s, low 50s, you know, getting that extra percentage point of penetration is going to be much more achievable for us, especially with some of these new tactics and strategies. Closing that gap completely is not what we have talked about.
Julia M. Laulis: Brandon This is Todd as we've chatted about in the past and discuss.
Todd M. Koetje: Lee.
Todd M. Koetje: Yes, 35% now versus many of the peer group in the high <unk> low <unk>.
Todd M. Koetje: Getting that extra percentage point of penetration is going to be much more achievable.
Todd M. Koetje: For us, especially with some of these new tactics and strategies closing that gap completely is not what we have talked about.
Julia M. Laulis: Yes, sure. So, you know, I guess, again, the question is, if you expect to close the gap, at what ARPU level do you expect to be at when you close the gap?
Similar: Similar yes, sure. So I guess again. The question is if you expect to close the gap at what our pool level do you expect to be at when you are closing the gap.
Julia M. Laulis: Well, I think that's a great question. I mean, again, if we use the seesaw analogy, while our penetration is going up and our ARPU is tilting down, their ARPU is going up while their penetration is tilting down.
Brandon: Well I think Thats a great question I mean again, if we use the C cell analogy, while while our penetration is going up in <unk>.
Julia M. Laulis: Tilting down there <unk> is going up all their penetration is tilting down somewhere we're all going to meet.
Speaker Change: But you can tell me, where you think that is I think it's for any of us to guests.
Julia M. Laulis: And somewhere, we're all going to meet. You can tell me where you think that is. I think it's for any of us to guess.
Todd M. Koetje: Recall also that the ARPU that we're looking at is a data-only ARPU for the vast majority of everything you look at, so an important element to think about as you look at comparing the benchmarks, if you will.
Julia M. Laulis: Recall also that RP that we're looking at is a data only RFP for the vast majority of everything you look at so.
Todd M. Koetje: Important element to think about as you look at.
Todd M. Koetje: Comparing the benchmarks if you will.
Julia M. Laulis: But I think what we're trying to suggest without giving too much leading guidance, because none of us has a crystal ball, is that we've taken some big steps, and we expect to see the ARPU slide ameliorated.
Todd M. Koetje: But I think what we're trying to suggest without without giving too much leading guidance because none of us has a crystal ball, but we.
Julia M. Laulis: <unk>.
Julia M. Laulis: We've taken some big steps and we expect to see.
Julia M. Laulis: <unk> slide ameliorate.
Speaker Change: Great. Thanks for taking the questions.
Brandon Lee Nispel: Great, thanks for taking the questions.
Brandon Lee Nispel: Your next question will come from the line of Greg Williams with PD Cowen. Please go ahead.
Operator: Your next question will come from the line of Greg Williams with TV Cowan. Please go ahead.
Gregory Bradford Williams: Great. Thanks for taking my questions.
Gregory Bradford Williams: I'll take the subscriber question in another way too. So you mentioned you are poised for sustained momentum here. So you are the only cable company that provide a positive subs. This quarter. So how have we reached a steady state you think now of positive subscriber growth.
Gregory Bradford Williams: So you mentioned you're poised for sustained momentum here. So you're the only cable company to provide positive subscriber growth this quarter. So have we reached a steady state, you think, now of positive subscriber growth? You know, absent ACP, maybe next quarter.
Gregory Bradford Williams: Absent ACP, maybe next quarter and.
Gregory Bradford Williams: And the second question then is on EBITDA. Todd, can you remind me if there were any first quarter seasonal impacts and how much they were? And you mentioned the OPEX cost for systems and platforms, and you're retiring 30 different systems. Can you give us some help on how much that would cost sort of up front? And then when you realize these millions in savings that Julia alluded to, when will that realization occur?
Speaker Change: And second question then is.
Todd: On EBITDA.
Gregory Bradford Williams: Can you remind me if there is any set first quarter seasonal impacts and how much they were in and you mentioned the opex cost for.
Gregory Bradford Williams: Systems and platforms and you're retiring 30 different systems can you give us some help on how much that would cost sort of upfront and then when you realize these millions in savings that Julie alluded to when would that realization occur. Thanks.
Julia M. Laulis: Sustain Momentum. It certainly feels like it, but quite honestly, I. My hope is that our team is thinking the way the Cable ONE team usually thinks, which is about continuous improvement and vetting that, thus the agile mindset and more trialing, like, look, we have found things that work. How many other things have we not tried yet? So I do think we have great momentum going forward. As you mentioned, OPS and ACP; I wouldn't put a cap on it yet.
Gregory Bradford Williams: Sustained momentum.
Julia M. Laulis: It certainly feels like it but quite honestly.
Julia M. Laulis: My hope is that.
Julia M. Laulis: Our team is thinking the way the cable one team usually thinks which is about continuous improvement and betting that.
Julia M. Laulis: Thus the agile mind set and more trialing like what we have found things that work how many other things work that have we not tried yet so I do think we have great momentum going forward as you mentioned absent ECP.
Julia M. Laulis: I wouldn't put a cap on it yet.
Julia M. Laulis: And Greg as it relates to seasonality question on EBITDA.
Todd M. Koetje: And Greg, as it relates to the seasonality question on Iveta, I wouldn't look at that as something that would have a meaningful impact on Q1. I think you have appropriately asked about the investments in these long-term platforms and the cost of those investments. As we've discussed now for a couple of quarters, those costs are going to impact 2024 as it relates to both OPEX and some SG&A, but these are long-term investments and overall efficiencies in terms of how we deliver the product, how we support the product, how we create a better customer experience, and how we create a better associate experience. And we referred to several millions of dollars in our prepared remarks on the back end of that, and there is an investment that we think is critical to make. And that was related to,
Todd M. Koetje: I wouldn't look at that as something that would.
Todd M. Koetje: Be a meaningful impact to Q1.
Todd M. Koetje: I think you <unk>.
Todd M. Koetje: Now for a couple of quarters those costs are going to impact.
Todd M. Koetje: 2024, as it relates to both Opex and some SG&A, but these are long term investments and overall efficiencies.
Todd M. Koetje: In terms of how we deliver the product how we support the product how we create a better customer experience and how we create a better associate experience and we referred to several millions of dollars in our prepared remarks.
Todd M. Koetje: On the back end of that.
Todd M. Koetje: And there is a there is an investment an investment that we think it's critical to make this year.
Todd M. Koetje: And that was related to just the billing platform implementation.
Speaker Change: Got it thank you.
Speaker Change: Got it.
Todd M. Koetje: Your next question will come from the line of Frank Louthan with Raymond James. Please go ahead.
Todd M. Koetje: And that was related to just the billing platform implementation. Got it. Thank you. Got it. Your next question will come from the line of Frank Louthan with Raymond James. Please go ahead.
Frank Garrett Louthan: Great. Thank you.
Frank Garrett Louthan: <unk> been growing those customers can you give us a sense is that coming from improving the gross add.
Frank Garrett Louthan: Or is it a little bit of less effect.
Frank Garrett Louthan: Or how should we how should we think about that and we can kind of back into the math, but do you want to give us some color on what the range of multiples or with the put for MDI.
Frank Garrett Louthan: Frank, it's Julie. We grew customers by increasing connects and reducing churn. Again, depending on where you're talking about, salt connects increased anywhere from high single digits to mid double digits, the likes of which we haven't seen since 2020, and churn is at all-time lows, especially in markets where we responded strongly to competition, and then Frank on the MBI front.
Todd M. Koetje: Frank It's Julie we grew customers by.
Frank Garrett Louthan: Increasing connects and reducing churn again.
Frank Garrett Louthan: The likes of which we haven't seen since 2020 and churn is at all time lows.
Frank Garrett Louthan: Responded strongly to competition.
Frank Garrett Louthan: Sure.
Todd M. Koetje: I guess, you know, Julie added some additional commentary in her remarks. Supplementing that in my remarks, I would say the most important thing as it relates to that is, you know, its performance trends are extremely impressive. Where it is from a network perspective, it is highly aligned with us. Where it is from a leadership and cultural perspective, it checks every box that we look at as it relates to, you know, ongoing investments in partners, both investments as well as acquisitions.
Speaker Change: I guess Julie added.
Todd M. Koetje: Definitely some additional commentary in her remarks.
Todd M. Koetje: By supplementing that in my remarks, I would say the most important thing as it relates to that is it's.
Todd M. Koetje: <unk> trends are extremely impressive.
Todd M. Koetje: He is highly aligned with us.
Todd M. Koetje: Where it is from a leadership and cultural perspective checks every box that we look at as it relates to ongoing investments in partners, both investments as well as acquisitions.
Todd M. Koetje: And we are very mindful of maintaining a very conservative balance sheet approach, both from a leverage parameter and also how we think about funding prospective transactions like that. And I think you heard me mention that we see a path to where we do not have to go to the capital markets to effect that transaction, given all the proactive planning that we've been doing now for the last two years.
Todd M. Koetje: And we are very mindful of maintaining a very conservative balance sheet approach.
Todd M. Koetje: Both from a leverage parameter.
Todd M. Koetje: And also how we think about funding.
Todd M. Koetje: Prospective transactions like that and I think you heard me mentioned that.
Todd M. Koetje: We see a path to where we do not have to go to the capital markets to affect that transaction given all the proactive planning that we've been doing now for the lab.
Todd M. Koetje: Last two years.
Speaker Change: Alright. Thank.
Speaker Change: Thank you.
Todd M. Koetje: Your next question will come from the line of Steven Cahall with Wells Fargo. Please go ahead.
Operator: Your next question will come from the line of Steven Cahall with Wells Fargo. Please go ahead.
Steven Lee Cahall: Thank you I wanted to maybe come at the subscriber trends from a slightly different direction. So I understand your strategy of targeting more of the value conscious consumer and thank you for talking through that a bit and the implications on our going forward I think the bit that I'm trying to understand is that it looked like resin.
Steven Lee Cahall: Thank you. I wanted to maybe come at the subscriber trends from a slightly different angle. So, I understand your strategy of targeting more of the value-conscious consumer, and thank you for talking through that a bit and the implications on ARPA going forward. But I think the bit that I'm trying to understand is that it looked like residential data revenue was down sequentially by about 3%. It was down, I think, year on year by about 3% as well.
Steven Lee Cahall: Data revenue was down sequentially about 3% it was down I think year on year about 3% as well.
Steven Lee Cahall: I think a lot of that has to do with the competition that you're facing and seeing lower ARPA on existing subs, despite all those other trends. So, because it's such a high gross margin business, how do we think about when your residential revenue for broadband might start to stabilize versus continuing to decline? And then, as a follow-up, Todd, I was wondering if you'd mention how many net ads you had in Q1 from ACP. I think you mentioned you were adding subscribers up until April, so just curious if that was a meaningful number. Thank you.
Steven Lee Cahall: I think a lot of that has to do with the competition that youre facing and seeing lower <unk> on existing subs. Despite all those other trends so because it's such a high gross margin business. How do we think about when youre residential revenue for broadband might start to stabilize versus continuing to decline.
Steven Lee Cahall: And then as a follow up Todd I was wondering if you mentioned how many net adds you had in Q1 from ACP. I think you mentioned you were adding subs up until April. So just curious if that was a meaningful number. Thank you.
Todd: I can let Julie maybe go above gas value conscious customers, then I can address the ACP, yes. So residential data revenue was down because of the <unk> decline and the <unk> decline was driven by the pieces that I went through earlier the law.
Steven Lee Cahall: I can let Julie maybe go about the value-conscious customers; then I can address the ACP.
Julia M. Laulis: Yeah, right. So residential data revenue was down because of the ARPU decline. And the ARPU decline was driven by the pieces that I went through earlier, the largest piece of that being the competitive pressure response in a few systems and then things like the migrations, which are a positive to revenue, being blunted by us adding in things that used to cost extra, like usage-based billing and unlimited data, as well as rate card adjustments, which are again positive to revenue, but are being offset by more promos and the value-conscious rates. That's just a small piece of the overall ARPU decline.
Julia M. Laulis: <unk> piece of that being the competitive pressure response in a few systems and then things like the migrations, which are a positive to revenue being blunted by us adding in things that used to cost extra like usage based billing and unlimited data.
Julia M. Laulis: As well as rate card adjustments, which are again positive to revenue, but being offset by more promos.
Julia M. Laulis: And the value conscious rates.
Julia M. Laulis: Just a small piece the value conscious race of the overall our patent decline.
Speaker Change: No I think your question was when do you think residential revenues will stabilize and we haven't given guidance about.
Julia M. Laulis: I don't know, I think your question was when do you think residential revenues will stabilize? And we haven't given guidance about, and never ever since being public, have we given guidance about where we think revenue or adjusted EBITDA will go. We have said that we are going to have a positive free cash flow year. And I will say that I believe that everything that we're doing right now sets us up for positive revenue and adjusted EBITDA growth in the future. ACP; we only did ACP installs until February 7th.
Julia M. Laulis: Never ever since being public have we given guidance about where we think revenue or adjusted EBITDA. We'll go. We have said that we are going to have a positive free cash flow year, and I will say that I believe that everything that we're doing right now sets us up for positive revenue and adjusted EBITDA growth.
Julia M. Laulis: In the future.
Julia M. Laulis: ACP, we only did ACP installs until February seven yes, that's exactly right. Steve in February 7th was the day that we are mandated to stop and we have basically started to pull on that already before that point in time.
Todd M. Koetje: Yeah, that's exactly right, Steven. February 7th was the day that we were mandated to stop, and we had basically started to pull on that already before that point in time. And so the comment around every single month of this quarter was a positive subscriber ad on a net basis, including, you know, after February 7th. So, you know, we didn't break down what the ACP net ads were for January and the first seven days of February. But suffice to say, we weren't really pressing on something that we already knew was going to be going away.
Todd M. Koetje: After February seven so.
Todd M. Koetje: Suffice to say, we werent really pressing on something that we already knew was going to be going away well and even if I exclude any ACP customers that came in in the first quarter. Our connects were up substantially so.
Julia M. Laulis: Well, and even if I exclude any ACP customers that came in in the first quarter, our connects were up substantially. So they're not up on the back of ACP. You know, my guess would be, and it would only be a guess because I can't quantify it, is that the connects are likely coming from competitors like We're getting connections that normally might go to a fixed wire.
Julia M. Laulis: We're getting connects that normally might go to fix.
Julia M. Laulis: Fixed wireless.
Speaker Change: Got it thank you.
Julia M. Laulis: Got it. Thank you. Because we're focusing on that segment, which is the value-conscious segment.
Julia M. Laulis: Focusing on time.
Julia M. Laulis: <unk>, which is the value conscious segment.
Julia M. Laulis: Great.
Operator: Again, to ask a question, press star 1, and your next question will come from the line of Kualan Paramaguru with BNP Paribas. Please go ahead.
Kohulan Paramaguru: Alright, Thanks, I've got two questions firstly on the Oct Dave.
Kohulan Paramaguru: Hi, thanks. I've got two questions. Firstly, on the R2, can you give us a little bit more color on what...
Kohulan Paramaguru: Can you give us a little bit more color on what all three of those gross adds are actually coming in on if we do some rough math it.
Kohulan Paramaguru: Just trying to think about if this is value accretive to the business. So how should we think about this in the long run.
Kohulan Paramaguru: And secondly around NPI does your comment around not necessarily meeting to come to the capital markets flow. The deal include an assumed draw down on the Lcs.
Kohulan Paramaguru: Thanks.
Todd M. Koetje: Yeah, good questions. I'll address both. Julie can jump in.
Todd M. Koetje: On the ARPU and the value-accretive side of the equation, it's a great question. As you're selling in at a lower price point to a new customer, one of the critical things to assess is how long-term accretive that customer is. And when you have 80% capacity in your network because of the way that we've invested in our network, and you have organizational capacity, many of these customers coming in markets that we already serve with that network, the way that we can deliver the product at a cost to install, Julie referred to in her prepared remarks around self-installs, as well as the way that we can support that product and that customer with a lot lower CPX. The value-acc And then you've got to look at the fact that
Todd M. Koetje: As you are selling in at a lower price point to a new customer.
Todd M. Koetje: I guess I can keep that helpful.
Todd M. Koetje: A lot lower Cps.
Todd M. Koetje: The value accretive nature of that new customer even at those lower price points, even if they never upgraded is accretive otherwise we wouldn't have done it and then you've got to look at the fact that over time that is a customer that is likely to upgrade.
Todd M. Koetje: Those.
Todd M. Koetje: Self.
Todd M. Koetje: Upgrades as well as where we can potentially see some of these promo prices roll off that Julie alluded to.
Todd M. Koetje: <unk> is yes, what we have committed in terms of our $1 billion credit facility, what we generate from free cash flow. What MBIA has committed that does not necessitate any change of control.
Todd M. Koetje: If it were to come into Cabo and there are free cash flow.
Todd M. Koetje: Okay. Thank you because that helpful.
Speaker Change: Yes. Thank you.
Kohulan Paramaguru: You bet. Thank you.
Speaker Change: You bet. Thank you.
Operator: And we have no further questions at this time. I'll turn the call back over to Julie Laulis for closing remarks.
Kohulan Paramaguru: And we have no further questions at this time I will turn the call back over to Julie Lewis for closing remarks.
Julia M. Laulis: Thank you Regina as we wrap up today's call I want to focus on what truly powers. Our success at cable one and that is the dedication and hard work of our people.
Julia M. Laulis: As we wrap up today's call, I want to focus on what truly powers our success at Cable ONE, and that is the dedication and hard work of our people. While today's discussion centered on topics that our shareholders have frequently inquired about, it's important to remember that it's our associates who turn these plans into reality. They are indeed our most valuable assets, so to each of our team members, thank you for your relentless effort and commitment.
Julia M. Laulis: While today's discussion centered on topics that our shareholders are frequently acquired about it's important to remember that is our associates, who turn these plans into reality.
Julia M. Laulis: Indeed, our most valuable asset so to each of our team members. Thank you for your relentless effort and commitment.
Julia M. Laulis: Additionally, for those interested, Todd and Jordan will represent Cable ONE later this month at the upcoming J.P. Morgan Conference in Boston, and we all know how much fun they are, so come and see them. Thanks, and speak to you again next quarter.
Julia M. Laulis: Additionally for those interested Todd and Jordan will represent cable. One later this month at the upcoming Jpmorgan conference in Boston, and we all know how much fun they are to come and Sam Thanks, and speak to you again next quarter.
Speaker Change: That does conclude today's call. We thank you all for joining you may now disconnect.
Operator: That does conclude today's call. We thank you all for joining us. You may now disconnect.
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