Q2 2024 WideOpenWest Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest second part of the 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today.

Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree and I will be your conference operator today. At this time, I would like to welcome everyone to the WideOpenWest second part of 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Desiree: At this time, I would like to welcome everyone to the Wide Open West second part of 2024 earnings call. All lines have been placed in 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 the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Andrew Posen, Vice President, Head of Investor Relations. Please go ahead.

Desiree: 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 followed by the number one on your telephone key chat. If you would like to withdraw your question, again, press the star one.

Speaker Change: After the speaker's remarks, there will be a question and answer session.

Speaker Change: If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.

Andrew Posen: I would now like to turn the conference over to Andrew Posen, Vice President, Head of Investor Relations. Please go ahead.

Speaker Change: If you would like to withdraw your question, again, press the star 1. I would now like to turn the conference over to Andrew Posen, Vice President, Head of Investor Relations. Please go ahead.

Teresa Elder: Good afternoon, everyone, and thank you for joining our second quarter of 2024 earnings call.

Andrew Posen: Good afternoon, everyone, and thank you for joining our second quarter 2024 earnings call. With me today is Teresa Elder, WOW's Chief Executive Officer, and John Rego, WOW's Chief Financial Officer.

Andrew Posen: Good afternoon, everyone, and thank you for joining our second quarter of 2024 earnings call. With me today is Teresa Elder, WOW's Chief Executive Officer, and John Rego, WOW's Chief Financial Officer.

Teresa Elder: What's me today is Teresa Elder, who has Chief Executive Officer and John Rego, while Chief Financial Officer. Before we get started, I would like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the Federal Securities law and are subject to known and unknown risks on certain days and other factors that may cause our actual operating results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements.

Andrew Posen: Before we get started, I would like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties, and other factors that may cause our actual operating results, financial position, or performance to be materially different from those expressed or implied in our forward-looking statements. Please use caution not to place undue reliance on such forward-looking statements. We disclaim any obligation to update these forward-looking statements.

Speaker Change: Before we get started, I would like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, and other matters relating to our business.

Andrew Posen: For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the risk factor section of our Form 10-K filed with the SEC, as well as the forward-looking statement section of our press release. In addition, please note that on today's call and in the press release we issued this afternoon, we may refer to certain non-GAAP financial measures.

Speaker Change: These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties, and other factors.

Speaker Change: that may cause our actual operating results.

Speaker Change: financial position or performance could be materially different from those expressed or implied in our forward-looking statements.

Teresa Elder: Your caution not to place undue reliance on such forward-looking statements. We disclaim any obligation to update such forward-looking statements.

Speaker Change: You are cautioned not to place undue reliance on such forward-looking statements.

Speaker Change: We disclaim any obligation to update such forward-looking statements.

Teresa Elder: For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the risk factor section of our Form 10-K filed with the SEC, as well as the forward-looking statement section of our press release. In addition, please note that on today's call, and in the press release we issued this afternoon, we may refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Speaker Change: For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please contact us.

Speaker Change: Please refer to our filings with the SEC, including the risk factor section of our Form 10-K filed with the SEC, as well as the forward-looking statement section of our press release.

Speaker Change: In addition, please note that on today's call and in the press release we issued this afternoon, we may refer to certain non-GAAP financial measures.

Andrew Posen: While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics for our historical reported results can be found in our earnings releases and our trending schedules, which can be found on our website. We have also included a presentation this afternoon to complement our prepared remarks. Now, I'll turn the call over to WOW's Chief Executive Officer, Teresa Elder.

Speaker Change: While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP.

Teresa Elder: Reconciliation between GAAP and non-GAAP metrics for our historical reported results can be found in our earnings releases and our trending schedules, which can be found on our website.

Speaker Change: Reconciliations between GAP and non-GAP metrics for our historical reported results can be found in our earnings releases and our trending schedules which can be found on our website.

Teresa Elder: We have also included a presentation this afternoon to complement our prepared remarks.

Speaker Change: We have also included a presentation this afternoon to complement our prepared remarks.

Teresa Elder: Now, I'll turn the call over to our Chief Executive Officer, Theresa Elder. Thanks, Andrew. Welcome to Wow's second quarter earnings call.

Speaker Change: Now, I'll turn the call over to WOW's Chief Executive Officer, Teresa Elder.

Teresa Elder: Thanks, Andrew. Welcome to WOW's second quarter earnings call. Before we start, here is a brief update on the unsolicited, non-binding acquisition proposal from DigitalBridge and Crestview Partners. A special committee of independent directors has been formed to evaluate the proposal, and the work of the committee is ongoing. While stockholders do not need to take any action related to the proposal at this time, and we do not have any updates to share today, we will take questions at the end of our remarks. However, we will not be taking any questions related to the unsolicited bid.

Teresa Elder: Thanks, Andrew. Welcome to WOW's second quarter earnings call. Before we start, here is a brief update on the unsolicited non-binding acquisition proposal from DigitalBridge and Crestview Partners.

Teresa Elder: Before we start, here is a brief update on the unsolicited non-binding acquisition proposal from Digital Bridge and Crest View Partners. A special committee of independent directors has been formed to evaluate the proposal, and the work of the committee is ongoing. Wow, stockholders do not need to take any action related to the proposal at this time, and we do not have any updates to share today. We will take questions at the end of our remarks; however, we will not be taking any questions related to the unsolicited bid.

Speaker Change: A special committee of independent directors has been formed to evaluate the proposal and the work of the committee is ongoing.

Speaker Change: While stockholders do not need to take any action related to the proposal at this time, and we do not have any updates to share today.

Speaker Change: We will take questions at the end of our remarks, however, we will not be taking any questions related to the unsolicited bids.

Teresa Elder: Now I would like to turn to our second quarter results. Our results this quarter were in line with our expectations and reflect momentum in our Greenfield fiber expansion and improvements in our legacy markets, which were offset by the loss of subscribers due to the ending of the ACP program. As we have emphasized over the past several quarters, we are focused on growing our fiber footprint in our expansion markets, including both Greenfield and Edgeouts, and stabilizing the losses in our legacy footprint. This quarter, we made substantial progress on both fronts, excluding the impact of losses related to ACP.

Teresa Elder: Now I would like to turn to our second quarter results. Our results this quarter were in line with our expectations and reflect momentum in our greenfield fiber expansion and improvements in our legacy markets, which were offset by the loss of subscribers due to the ending of the ACP program. As we have emphasized over the past several quarters, we are focused on growing our fiber footprint in our expansion markets, including both Greenfield and EdgeOps, and stabilizing the losses in our legacy footprint.

Speaker Change: Now I would like to turn to our second quarter results.

Speaker Change: Our results this quarter were in line with our expectations.

Speaker Change: and reflect momentum in our greenfield fiber expansion and improvements in our legacy markets which were offset by the loss of subscribers due to the ending of the ACP program.

Speaker Change: As we have emphasized over the past several quarters, we are focused on growing our fiber footprint in our expansion markets, including both greenfield and edge outs, and stabilizing the losses in our legacy footprint.

Teresa Elder: This quarter, we made substantial progress on both fronts; excluding the impact of losses related to ACP, we would have reported a net gain of more than 300 high-speed data customers. Our second quarter results include high-speed data revenue of $105 million, down 1.6% year-over-year. Adjusted EBITDA of $70 million increased 2.8% year-over-year, and an adjusted EBITDA margin of 44.1% was up 4.6 percentage points from the same period last year and 2.4 percentage points from last quarter. We have now fully realized the target of $35.5 million in savings, more than a year ahead of schedule.

Speaker Change: This quarter, we made substantial progress on both fronts.

Teresa Elder: We would have reported a net gain of more than 300 high-speed data customers. Our second quarter results include high-speed data revenue of 105 million, down 1.6% year-over-year. Adjusted EBITDA of 70 million increased 2.8% year-over-year, and an adjusted EBITDA margin of 44.1% was up 4.6% from the same period last year and 2.4% from last quarter. We have now fully realized the target of 35.5 million savings, more than a year ahead of schedule. I am pleased with the progress that we continue to make, both in terms of growing our fiber business in new markets, while also reducing our cost base and managing expenses to drive adjusted EBITDA growth.

Speaker Change: Excluding the impact of losses related to ACP.

Speaker Change: we would have reported a net gain of more than 300 high-speed data customers.

Speaker Change: Our second quarter results include high-speed data revenue of $105 million, down 1.6% year-over-year.

Speaker Change: Adjusted EBITDA of 70 million increased 2.8% year over year, and an adjusted EBITDA margin of 44.1% was up 4.6% points from the same period last year.

Speaker Change: and 2.4 percentage points from last quarter.

Speaker Change: We have now fully realized the target of 35.5 million savings, more than a year ahead of schedule.

Teresa Elder: I am pleased with the progress that we continue to make, both in terms of growing our fiber business in new markets, while also reducing our cost base and managing expenses to drive adjusted EBITDA growth. During the second quarter, our fiber expansion proceeded well. We passed an additional 7,000 new homes in our greenfield markets, bringing our total number of homes passed in greenfield markets to 52,500. We also added 1,900 new homes to Rego.

Speaker Change: I am pleased with the progress that we continue to make, both in terms of growing our fiber business in new markets, while also reducing our cost base and managing expenses to drive adjusted EBITDA growth.

Teresa Elder: During the second quarter, our fiber expansion proceeded well. We passed an additional 7,000 new homes in our Greenfield markets, bringing our total number of homes passed in Greenfield markets to 52,500. We also added 1,900 new homes through Edgeouts. Our expansion efforts are further driving our growth and continue to lay the foundation for our exciting future, providing exceptional quality fiber to the home broadband service with what we believe is the best value in the markets. The consistent improvement in our penetration rates across Edgeouts and Greenfields reinforces my conviction in our strategy. The penetration rates in our Greenfield markets increased nearly 3% to 15.4%, up from 12.5% at the end of the first quarter.

Speaker Change: During the second quarter, our fiber expansion proceeded well. We passed an additional 7,000 new homes in our greenfield markets.

Speaker Change: bringing our total number of homes passed in Greenfield Market to 52,500.

Speaker Change: We also added 1,900 new homes to Redouch.

Teresa Elder: Our expansion efforts are further driving our growth and continue to lay the foundation for our exciting future, providing exceptional quality fiber to the home broadband service with what we believe is the best value in the market. The consistent improvement in our penetration rates across edge-outs and greenfields reinforces my conviction in our strategy. The penetration rates in our greenfield markets increased nearly three percentage points to 15.4%, up from 12.5% at the end of the first quarter.

Speaker Change: Our expansion efforts are further driving our growth and continue to lay the foundation for our exciting future.

Speaker Change: providing exceptional quality fiber-to-the-home broadband service with what we believe is the best value in the market.

Speaker Change: The consistent improvement in our penetration rates across EDGE apps and Greenfields reinforces my conviction in our strategy.

Speaker Change: The penetration rates in our greenfield markets increased nearly three percentage points to 15.4 percent, up from 12.5 percent at the end of the first quarter.

Teresa Elder: Our Edgeouts are also performing extremely well, especially the 2024 vintage, which increased to 38.6%, growing over 6% from the end of last quarter. Our 2023 Edgeout vintage increased to a penetration rate of 28.6%, which is also a great improvement from last quarter. The 2022 vintage remains strong at 31%. I am pleased with further progress we made during the quarter with respect to our subscriber numbers. The ending of the ACP program resulted in a churn of 5,000 high-speed data subscribers, resulting in a total net loss of 4,700 high-speed data subscribers. Excluding the ACP impact, HSD net odds increased by 300 subscribers.

Teresa Elder: Our edge outs are also performing extremely well, especially the 2024 vintage, which increased to 38.6 percent, growing over six percentage points from the end of last quarter. Our 2023 edge out vintage increased to a penetration rate of 28.6 percent, which is also a great improvement from last quarter. The 2022 vintage remains strong at 31 percent.

Speaker Change: Our edge outs are also performing extremely well, especially the 2024 vintage, which increased to 38.6%, growing over 6 percentage points from the end of last quarter.

Speaker Change: Our 2023 Edge Out Vintage increased to a penetration rate of 28.6%, which is also a great improvement from last quarter.

Speaker Change: The 2022 vintage remains strong at 31%.

Teresa Elder: I am pleased with further progress we made during the quarter with respect to our subscriber numbers. The ending of the ACP program resulted in a churn of 5,000 high-speed data subscribers, resulting in a total net loss of 4,700 high-speed data subscribers. Excluding the ACP impact, HSD net ebbs increased by 300 subscribers.

Speaker Change: I am pleased with further progress we made during the quarter with respect to our subscriber numbers.

Speaker Change: The ending of the ACP program resulted in a churn of 5,000 high-speed data subscribers, resulting in a total net loss of 4700 high-speed data subscribers.

Speaker Change: Excluding the ACP impact, HSD net ebbs increased by 300 subscribers.

Teresa Elder: I would like to break this down a little bit further to emphasize the progress we are making in our legacy footprint. Specifically, in the second quarter, our Greenfield markets added 2,400 new HSD subscribers. Excluding the 5,000 subs from ACP, the losses in our legacy markets accounted for a loss of 2,100 HSD subs, which is 1,000 fewer losses than the first quarter and a significant improvement from the fourth quarter of last year. While there will be further impact from ACP in the third quarter, our efforts to keep those customers on our platform are mitigating some of these losses.

Teresa Elder: I would like to break this down a little bit further to emphasize the progress we are making in our legacy footprint. Specifically, in the second quarter, our greenfield markets added 2,400 new HST subscribers; excluding the 5,000 subs from ACP, the losses in our legacy markets accounted for a loss of 2,100 HSD subscribers, which is 1,000 fewer losses than the first quarter and a significant improvement from the fourth quarter of last year.

Speaker Change: I would like to break this down a little bit further to emphasize the progress we're making in our legacy footprint.

Speaker Change: Specifically, in the second quarter, our greenfield markets added 2,400 new HST subscribers.

Speaker Change: Excluding the 5,000 subs from ACP, the losses in our legacy markets accounted for a loss of 2100 HSD subs, which is 1,000 fewer losses than the first quarter, and a significant improvement from the fourth quarter of last year.

Teresa Elder: While there will be further impact from ACP in the third quarter, our efforts to keep those customers on our platform are mitigating some of these losses. Overall, we continue to see very low churn across our base, and the strategic steps we introduced during the first quarter are continuing to show extremely positive results. Specifically, we introduced speed upgrades and our Simplified Pricing Plan, which includes an optional price lock, modem included, no data caps, and no contracts.

Speaker Change: While there will be further impact from ACP in the third quarter, our efforts to keep those customers on our platform are mitigating some of these losses.

Teresa Elder: Overall, we continue to see very low churn across our base, and the strategic steps we introduced during the first quarter are continuing to show extremely positive results. Specifically, we introduced speed upgrades and our simplified pricing plan, which includes an optional price lock, modem included, no data caps, and no contracts. The continued success of these strategies has given us additional confidence in the progress we are making to strengthen our subscriber numbers in our legacy footprint. The chart on the lower left quadrant of the slide shows customers buying in the lower tiers was consistent with last quarter as we worked to lower the impact from the ending of the ACP program.

Speaker Change: Overall, we continue to see very low churn across our base, and the strategic steps we introduced during the first quarter are continuing to show extremely positive results.

Speaker Change: Specifically, we introduced speed upgrades and our Simplified Pricing Plan, which includes an optional price lock, modem included, no data caps, and no contracts.

Teresa Elder: The continued success of these strategies has given us additional confidence in the progress we are making to strengthen our subscriber numbers and our legacy footprint. The chart on the lower left quadrant of the slide shows customers buying in the lower tiers, which was consistent with last quarter as we worked to lower the impact from the ending of the ACP program. This resulted in a slight decrease in HSD ARPU relative to the previous quarter, although compared to the same period last year, ARPU increased 2.6%.

Speaker Change: The continued success of these strategies has given us additional confidence in the progress we are making to strengthen our subscriber numbers and our legacy footprint.

Speaker Change: The charge on the lower left quadrant of the slide shows customers buying in the lower tiers was consistent with last quarter as we work to lower the impact from the ending of the ACP program.

Teresa Elder: This resulted in a slight decrease in HSD, RPU relative to last quarter, although compared to the same period last year, RPU increased 2.6%. The year-over-year increase was largely driven by last year's rate increase, as well as the impact of new customers buying higher speed tiers, especially in greenfield markets. As of the second quarter, we now have 485,000 HSD subscribers. As expected, our traditional video business declined further during the quarter, which will continue as we transition to YouTube TV. The success of this partnership is another factor that is contributing to the consistent low churn across our customer base.

Speaker Change: This resulted in a slight decrease in HSD ARPU relative to last quarter, although compared to the same period last year, ARPU increased 2.6%.

Teresa Elder: The year-over-year increase was largely driven by last year's rate increase, as well as the impact of new customers buying higher-speed tiers, especially in greenfield markets. As of the second quarter, we now have 485,000 HSD subscribers. As expected, our traditional video business declined further during the quarter, which will continue as we transition to YouTube TV. The success of this partnership is another factor that is contributing to the consistent low churn across our customer base.

Speaker Change: The year-over-year increase would largely driven by last year's rate increase, as well as the impact of new customers buying higher speed tiers, especially in greenfield markets.

Speaker Change: As of the second quarter, we now have 485,000 HSD subscribers.

Speaker Change: As expected, our traditional video business declined further during the quarter, which will continue as we transition to YouTube TV.

Speaker Change: The success of this partnership is another factor that is contributing to the consistent low churn across our customer base.

Teresa Elder: We are seeing a nice increase in customers buying an HSD YouTube TV bundle. A trend we expect to continue, especially in our expansion markets. Our partnership provides a fantastic opportunity to offer more content at a much better value and to capitalize on the shift to video streaming, which we believe will also contribute to great results this year.

Teresa Elder: We are seeing a nice increase in customers buying an HSD YouTube TV bundle, a trend we expect to continue, especially in our expansion market. Our partnership provides a fantastic opportunity to offer more content at a much better value and to capitalize on the shift to video streaming, which we believe will also contribute to great results this year. To conclude, before handing the call to John, I want to reiterate the key points that I made at the outset of the call.

Speaker Change: We are seeing a nice increase in customers buying an HSD YouTube TV bundle, a trend we expect to continue, especially in our expansion markets.

Speaker Change: Our partnership provides a fantastic opportunity to offer more content at a much better value and to capitalize on the shift to video streaming, which we believe will also contribute to great results this year.

Teresa Elder: to conclude before handing the call to John, I want to reiterate the key points that I made at the outset of the call. First, we continue to make great progress with our fiber-build in expansion markets, both in terms of passing new homes and increasing our penetration rates. And we are seeing ongoing progress with regard to stabilizing our numbers and our legacy footprint.

Speaker Change: To conclude before handing the call to John , I want to reiterate the key points that I made at the outset of the call.

Teresa Elder: First, we continue to make great progress with our fiber build in expansion markets, both in terms of passing new homes and increasing our penetration rates. And we are seeing ongoing progress with regard to stabilizing our numbers in our legacy footprint. I'll now turn the call over to John, who will go over our financial results in more detail.

John Rego: First, we continue to make great progress with our fiber build in expansion markets, both in terms of passing new homes and increasing our penetration rates. And we are seeing ongoing progress with regard to stabilizing our numbers in our legacy footprint.

John Rego: I'll now turn the call over to John, who will go over our financial results in more detail. Thanks, Teresa. In the second quarter, we reported $105 million of HSD revenue, which decreased 1.6% year-over-year, largely reflecting the decrease in HSD subscribers due to ACP, as well as the impact of lower RPU during the quarter. Total revenue for the second quarter decreased 8% to 158.8 million, as video and telephony revenue dropped 26% and 11.6%, respectively, in addition to the decline in HSD revenue during the quarter. Adjusted EBITDA increased 2.8% from the same period last year to $70 million, with an adjusted EBITDA margin of 44.1%.

John Rego: In the second quarter, we reported $105 million in HSD revenue, which decreased 1.6% year-over-year, largely reflecting the decrease in HSD subscribers due to ACP, as well as the impact of lower ARPU during the quarter. Total revenue for the second quarter decreased 8% to $158.8 million as video and telephony revenue dropped 26% and 11.6%, respectively, in addition to the decline in HSD revenue during the quarter. Adjusted EBITDA increased 2.8% from the same period last year to $70 million, with an adjusted EBITDA margin of 44.1%.

John Rego: I'll now turn the call over to John , who will go over our financial results in more detail.

John Rego: Thanks, Teresa.

John Rego: In the second quarter, we reported $105 million of HSD revenue, which decreased 1.6 percent year-over-year, largely reflecting the decrease in HSD subscribers due to ACP, as well as the impact of lower ARPU

John Rego: during the quarter.

Speaker Change: Total revenue for the second quarter decreased 8% to $158.8 million as video and telephony revenue dropped 26% and 11.6% respectively, in addition to the decline in HSD revenue during the quarter.

John Rego: Adjusted EBITDA increased 2.8% from the same period last year to $70 million, with an adjusted EBITDA margin of 44.1%.

John Rego: The incremental contribution margin increased sequentially and continued to grow year-over-year, driven by the proportionate increase in HSD revenue, which increased to more than 66% of our total revenue this quarter, which is up from 62% in the same period last year. With respect to our cost structure alignment, we made significant progress this quarter and have now fully realized the target of 35.5 million more than a year ahead of schedule. In addition to these measures, we made further expense reductions, predominantly in our corporate and administrative areas, as we continue to focus on reducing our cost structure, which helped drive our adjusted EBITDA higher this quarter.

John Rego: The incremental contribution margin increased sequentially and continued to grow year over year driven by the proportionate increase in HSD revenue, which increased to more than 66% of our total revenue this quarter, which is up from 62% in the same period last year.

John Rego: The incremental contribution margin increased sequentially and continued to grow year over year driven by the proportionate increase in HSD revenue, which increased to more than 66% of our total revenue this quarter, which is up from 62% in the same period last year.

John Rego: With respect to our cost structure alignment, we made significant progress this quarter and have now fully realized the target of $35.5 million, more than a year ahead of schedule. In addition to these measures, we made further expense reductions, predominantly in our corporate and administrative areas, as we continue to focus on reducing our cost structure, which helped drive our adjusted EBITDA higher this quarter. We ended the quarter with total cash of $20.7 million and total outstanding debt of $974.5 million, with our leverage ratio at 3.4 times.

John Rego: With respect to our cost structure alignment, we made significant progress this quarter and have now fully realized the target of $35.5 million more than a year ahead of schedule.

John Rego: In addition to these measures, we made further expense reductions, predominantly in our corporate and administrative areas, as we continue to focus on reducing our cost structure, which helped drive our adjusted EBITDA higher this quarter.

John Rego: We ended the quarter with total cash of $20.7 million, and total outstanding debt of $974.5 million, with our leverage ratio at 3.4 times. Our current cash position is largely in line with last quarter, as we continue to lower our cost space and manage working capital. We reported total capital spend of $51.1 million, down $12.5 million from last year, and down $21.4 million from last quarter. This reflects a significant decrease in expansion cap-ex. Our core cap-ex efficiency was 21.1% in the second quarter. Expansion cap-ex decreased 12.8 million from the same period last year, and 29.4 million from last quarter, as we emphasized lighting up homes we passed in increasing penetration in our expansion markets.

Speaker Change: We end of the quarter with total cash of $20.7 million and total outstanding debt of $974.5 million. With our leverage ratio at 3.4 times.

John Rego: Our current cash position is largely in line with last quarter as we continue to lower our cost base and manage working capital. We reported total capital spend of $51.1 million, down $12.5 million from last year and down $21.4 million from last quarter. This reflects a significant decrease in expansion capital expenditure.

John Rego: Our current cash position is largely in line with last quarter as we continue to lower our cost base and manage working capital.

John Rego: We reported total capital spend of $51.1 million, down $12.5 million from last year, and down $21.4 million from last quarter. This reflects a significant decrease in expansion capex.

John Rego: Our core CapEx efficiency was 21.1% in the second quarter. Expansion CapEx decreased $12.8 million from the same period last year and $29.4 million from the previous quarter, as we emphasize lighting up homes we pass and increasing penetration in our expansion markets. In the second quarter, we spent $10.2 million on greenfields, $2.7 million on edge outs, and an additional $4.7 million on business services. We believe we are on track to spend no more than $60 million on greenfield expansion this year. Although the pace of Greenfield construction has slowed down compared to Q1, it is in line with our CapEx and will continue to operate at a slower pace for the time being.

John Rego: Our core CapEx efficiency was 21.1% in the second quarter.

John Rego: Expansion CapEx decreased $12.8 million from the same period last year, and $29.4 million from last quarter, as we emphasize lighting up homes we passed and increasing penetration in our expansion markets.

John Rego: In the second quarter, we spent 10.2 million on greenfields, 2.7 million on edge outs, and an additional 4.7 million on business services. We believe we are on track to spend no more than 60 million on greenfield expansion this year. Although the pace of greenfield construction has slowed down compared to Q1, it is in line with our cap-ex and will continue to operate at a slower pace for the time being. We're currently exploring options to enhance our ability to accelerate our expansion initiatives. Specifically, we're actively exploring a number of options to secure additional funding. This process may or may not result in a near-term transaction.

John Rego: In the second quarter, we spent $10.2 million on greenfields, $2.7 million on edge outs, and an additional $4.7 million on business services.

John Rego: We believe we are on track to spend no more than $60 million on Greenfield expansion this year. Although the pace of Greenfield construction has slowed down compared to Q1, it is in line with our CapEx and will continue to operate at a slower pace for the time being.

John Rego: We're currently exploring options to enhance our ability to accelerate our expansion initiative. Specifically, we're actively exploring a number of options to secure additional funding. This process may or may not result in a near-term transaction. Our Unlevered Adjusted Free Cash Flow, which we define as Adjusted EBITDA less CapEx, was $18.9 million for the second quarter.

John Rego: We're currently exploring options to enhance our ability to accelerate our expansion initiatives.

John Rego: Specifically, we're actively exploring a number of options to secure additional funding. This process may or may not result in a near-term transaction.

John Rego: Our unleavened adjusted free cash flow, which we define as adjusted EBITDA less CAPEX, was 18.9 million for the second quarter. A significant improvement from last quarter driven by the reduction in expansion CAPEX.

John Rego: Our Unleavened Adjusted Free Cash Flow, which we define as adjusted EBITDA less capex, was 18.9 million for the second quarter. A significant improvement from last quarter, driven by the reduction in expansion capex.

John Rego: A significant improvement from last quarter, driven by the reduction in Expansion CapEx. Finally, I'd like to provide our expectations for the third quarter. As Teresa indicated in her comments this morning, we're seeing positive indications from the steps we are taking to address the challenges in our legacy market. However, we believe that our results in the third quarter will reflect a number of competing dynamics that may negatively impact our HSD subscriber numbers.

John Rego: Finally, I'd like to provide our expectations for the third quarter. If Teresa indicated in her comments this morning, we're seeing positive indications from the steps we are taking to address the challenges in our legacy markets. However, we believe that our results in the third quarter will reflect a number of competing dynamics that may negatively impact our HSD subscriber numbers. First, we believe that there will be an additional ACP impact on our numbers this quarter. Secondly, we're anticipating a reduction in capital spend on our expansion initiatives, which could lower the number of HSD subscribers in these markets.

John Rego: Finally, I'd like to provide our expectations for the third quarter. As Theresa indicated in her comments this morning, we're seeing positive indications from the steps we are taking to address the challenges in our legacy markets.

Theresa: However, we believe that our results in the third quarter will reflect a number of competing dynamics that may negatively impact our HSD subscriber numbers.

John Rego: We believe that there will be an additional ACP impact on our numbers this quarter. And, secondly, we're anticipating a reduction in capital spend on our expansion initiatives, which could lower the number of HSD subscribers in these markets. As a result of these items, we expect our HSDNet ads to be between negative 5,000 and negative 3,000. We believe HSD revenue will be between $106 million and $109 million. We expect total revenue for the third quarter to be between $157 million and $160 million, and adjusted EBITDA to be between $67 million and $70 million. Thank you so much, and now we're going to open up the line for some questions.

John Rego: First, we believe that there will be an additional ACT impact on our numbers this quarter, and secondly, we're anticipating a reduction in capital spend on our expansion initiatives, which could lower the number of HSD subscribers in these markets.

John Rego: As a result of these items, we expect our HSD net adds to be between negative 5,000 and negative 3,000. We believe HSD revenue will be between 106 million and 109 million. We expect total revenue for the third quarter to be between 157 million and 160 million, and adjusted EBITDA to be between 67 million and 70 million.

John Rego: As a result of these items, we expect our HSDNet ads to be between negative 5,000 and negative 3,000.

John Rego: We believe HSD revenue will be between $106 million and $109 million.

John Rego: We expect total revenue for the third quarter to be between $157 million and $160 million, and adjusted EBITDA to be between $67 million and $70 million.

John Rego: Thank you so much, and now we're going to open up the line for some questions. Thank you.

Speaker Change: Thank you so much, and now we're going to open up the line for some questions.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star one to join the queue. Your first question comes from the line of Brandon Nispel with KeyBank Capital Markets. Your line is open.

Desiree: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone device to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone to track to raise your hand on going to queue. If you would like a majority of questions, simply press star 1 again.

Desiree: If you are called upon to ask your question and are listening via speaker phone and your device, please pick up your handset to ensure that your phone is not unmute and asking your question. Again, press star one to join the queue.

John Rego: If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press star 1 to join the queue.

Brandon Nispel: Your first question comes from the line of Brandon Nisple with KeyBank Capital Market. Your line is open. Thanks for taking the questions, John.

Speaker Change: Your first question comes from the line of Bradden Nezbo, the key bank capital market. Your line is open.

Brandon Nispel: Thanks for taking the questions, John. I was hoping you could go a little bit deeper in terms of the options you're exploring for liquidity, it looks like you ended the quarter with a fully drawn revolver and $20 million in cash, and maybe you could level set us, what do you expect for free cash flow for the rest of the year, and what does that mean in terms of new home expansion on Greenfield this year? Thanks.

John Rego: I was hoping you could go a little bit deeper in terms of the options you're exploring for liquidity. It looks like you ended the quarter with a fully drawn revolver and 20 million in cash and maybe level set us. What do you expect for free cash flow for the rest of the year, and what does that mean in terms of new home expansion on greenfield for this year? Thanks.

Speaker Change: [inaudible]

Bradden Nezbo: Hey guys. Thanks for taking the questions. John , I was hoping you could go a little bit deeper in terms of the options you're exploring for liquidity. It looks like you ended the quarter with a fully drawn revolver and $20 million in cash and maybe level set us. What do you expect for free cash flow for the rest of the year and what does that mean in terms of new home expansion on Greenfield for this year? Thanks.

John Rego: Okay, so thanks Brandon. A lot in there. So clearly, we're managing our cash position. I think we did a great job of it in the second quarter. We've done a lot of different things that we mentioned on the call. So we've lowered our OPEX, and that's one of the reasons we were able to hit the three-year target of $33.5 million early. We've gone beyond that.

John Rego: Okay, so thanks, Brandon. A lot of in there, so clearly we're managing our cash position. I think we did a great job of it in the second quarter. We've done a lot of different things that we mentioned on the call, so we've lowered our op-ex, and that's one of the reasons we were able to hit the three-year target of 35 and a half million early. We've gone beyond that. Clearly, we've not stopped, but we've slowed the pace of capital spending in expansion, and obviously we're managing our working capital, so we've got lots of ways to preserve liquidity, and I don't really feel we have any issues there.

Speaker Change: Okay, so thanks Brandon. A lot in there. So clearly we're managing our cash position. I think we did a great job of it in the second quarter. We've done a lot of different things that we mentioned on the call. So we've lowered our OPEX, and that's one of the reasons we were able to hit the three-year target of $35.5 million early.

John Rego: Clearly, we've not stopped, but we've slowed the pace of capital spending on expansion. And obviously, we're managing our working capital. So we've got lots of ways to preserve the liquidity, and I don't really feel we have any issues there. The theoretical possible funding options or any other options we would look at, it's too early to give you great detail on that, but the whole purpose of that would be to, you know, be able to expand the pace, I think, of expansion CapEx.

Speaker Change: We've gone beyond that. Clearly we've not stopped, but we've slowed the pace of capital spending in expansion.

Speaker Change: and obviously we're managing our working capital. So we've got lots of ways to preserve liquidity and I don't really feel we have any issues there.

John Rego: The theoretical possible funding options or any other options we would look at too early to give you great detail on that, but the whole purpose of that would be to, you know, be able to expand the pace, I think, of expansion cat-backs. So right now we're on a pace to spend the 60 million for Greenfield that we said we spent at the beginning of the year. We've already done about 51 million of it. That'll see any change at all in that, and to the extent that you know, we create some sort of transaction and think you'll see us expand that a bit.

Speaker Change: The theoretical possible funding options or any other options we would look at to really give you great detail on that but the whole purpose of that would be to, you know, be able to expand the pace.

John Rego: So right now, we're on a pace to spend the $60 million for Greenfield that we said we would spend at the beginning of the year. We've already done about $51 million of it. I don't see any change at all in that. And to the extent that, you know, we create some sort of transaction, then I think you'll see us expand that a bit. That's where we are.

Speaker Change: I think of expansion capex. So right now we're on a pace to spend the 60 million for Greenfields that we said we've been spending at the beginning of the year. We've already done about 51 million of it, that'll be any change at all in that.

Speaker Change: And to the extent that, you know, we create some sort of transaction, then I think you'll see us expand that a bit. That's where we're at right now.

John Rego: That's where we're at.

John Rego: right now.

Brandon Nispel: Great.

Operator: Great, thank you for taking the questions.

Brandon Nispel: Thank you for taking the question.

Batya Levy: Next question comes from the line of Batya Levy with UBS. Your line is open. Great. Thank you.

Speaker Change: Great, thank you for taking the questions.

Patya Levy: The next question comes from the line of Patya Levy with UBS. Your line is open.

Speaker Change: Good night.

Speaker Change: Next question comes from the line of Patya Levy with UBS. Your line is open.

Teresa Elder: Great, thank you. Can you provide a little bit more color on the HSD subscriber trends you're seeing, specifically the guidance for the third quarter? How much of that is, do you think, related to ACP? Are you taking any reserves against that, and should we assume it will be done by the end of the third quarter? And a bit of color in terms of the competitive environment would be helpful; in terms of fixed wireless, are you seeing any incremental build from overbuilders or anything different from the cable side? And maybe lastly, a bit more of how you're thinking about HSD output trends going forward would be helpful. Thank you.

Batya Levy: Can you provide a little bit more color on HSD? Subscribe or Trends? You're seeing specifically the guidance for third quarter. How much of that is you think related to ACP? Are you taking any reserves against that, and should we assume it will be done by the end of third quarter?

Patya Levy: Great, thank you. Can you provide a little bit more color on HSD subscriber trends you're seeing, specifically the guidance for third quarter? How much of that do you think is related to ACT?

Speaker Change: Are you taking any reserves against that, and should we assume it will be done by the end of third quarter?

Batya Levy: And a bit of color in terms of the competitive environment would be helpful in terms of fixed wireless. Are you seeing any incremental build from overbuilders or anything different from the cable side?

Speaker Change: And a bit of color in terms of the competitive environment would be helpful in terms of fixed wireless. Are you seeing any incremental build from overbuilders or anything different from the cable side? And maybe lastly, a bit more how you're thinking about HSD output trends going forward would be helpful. Thank you.

John Rego: And maybe lastly a bit more sort of how you're thinking about HSD output trends going forward would be helpful. Thank you. Thanks, Batya. So, first of all, on the HSD subscribers, I think we're feeling very good about certainly this quarter we're talking about right now, and that we would have had 300 net ad positive except for ACP. And I feel like we've been managing the ACP base quite well. At our peak, we have 30,000 subscribers, so certainly less exposure than many of our peers out there. Specifically for the third quarter, we will continue to see some impact from ACP, and I can tell you well over half of the disconnects that we are seeing are customers who were in a non-paced status. So they may have had all of their fees subsidized with the $30 or the majority of it, but then when the subsidy went away with the ACP program, they were no longer able to cover those.

Teresa Elder: Thanks, Batya. So, first of all, on the HSC subscribers, I think we're feeling very good about, certainly this quarter we're talking about right now, that we would have had 300 net ad positives except for ACP, and I feel like we've been managing the ACP base quite well. At our peak, we had 30,000 subscribers, so certainly less exposure than many of our peers out there. But specifically for the third quarter, we will continue to see some impact from ACP, and I can tell you well over half of the disconnects that we are seeing are customers who were in a non-pay status. So they may have had all of their fees subsidized by $30, or the majority of it, but then when the subsidy went away with the ACP program, they were no longer able to cover them.

Speaker Change: Thanks, Batya. So, first of all, on the HSC subscribers, I think we're feeling very good about, certainly this quarter we're talking about right now, that we would have had 300 net ad positives except for ACP. And I feel like we've been managing the ACP base quite well. At our peak, we had 30,000 subscribers, so certainly less exposure than many of our peers out there.

Speaker Change: Specifically for the third quarter, we will continue to see some impact.

Speaker Change: from ACP, and I can tell you well over half of the disconnect that we are seeing. Our customers who are more in a non-paced status.

Speaker Change: So they may have had all of their...

Speaker Change: fees subsidized with the $30 or the majority of it, but then when the subsidy went away with the ACCP program, they were no longer able to cover those. I think we've done a good job converting as many as possible into ongoing paying subscribers. We certainly are always balancing preserving EBITDA with throwing caution to the wind on ARPU and balancing that with customers.

John Rego: I think we've done a good job converting as many as possible into ongoing paying subscribers. We certainly are always balancing preserving EBITDA with throwing caution to the wind on ARPU and balancing that with customers. So for the third quarter, we'll still seek some of that impact. It's hard to know exactly how much that will be, which is why we've put the guide out there the way that we're seeing it.

Teresa Elder: So I think we've done a good job converting as many as possible into ongoing paying subscribers. We certainly are always balancing preserving EBITDA with throwing caution to the wind on ARPU and balancing that with customers. So for the third quarter, we'll still see some of that impact.

Speaker Change: So for the third quarter, we'll still seek some of that impact. It's hard to know exactly how much that will be, which is why we've put the guide out there the way that we're seeing it.

Teresa Elder: It's hard to know exactly how much that will be, which is why we've put the guide out there the way that we're seeing it. I think your second question was about the competitive environment. And I think things have shifted a bit in terms of the competitive environment. I think we've seen a softening of any competitive impact from fixed wireless, as has been widely reported throughout the industry. I see, I guess, two reasons for that.

John Rego: From I think your second question was around the competitive environment, and I think things have shifted a bit in terms of the competitive environment. I think we've seen a softening of any competitive impact from fixed wireless, as has been widely reported throughout the industry. I see I guess two reasons for that. One is just the fixed wireless providers themselves. I don't know if they're getting to saturation on the source or what their issues are, but specifically I can point to the competitive strategies we took starting February 1st of this year. Specifically on our customer base, we upgraded the 200-meg subscribers to 300, and our 500-meg customers to 600, and I think customers have appreciated that surprise and delight and appreciate the speeds that they're getting.

Speaker Change: from, I think your second question was around the competitive environment.

Speaker Change: And I think things have shifted a bit in terms of the competitive environment. I think we've seen a softening of any competitive impact from fixed wireless, as has been widely reported throughout the industry. I guess two reasons for that one is just the fixed wireless providers themselves.

Teresa Elder: One is just the fixed wireless providers themselves; I don't know if they're getting to saturation on their networks or what their issues are. But specifically, I can point to the competitive strategies we adopted starting February 1st of this year. Specifically, in our customer base, we upgraded the 200 meg subscribers to 300, and our 500 meg customers to 600. And I think customers have appreciated that surprise and delight and appreciated the speeds that they're getting.

Speaker Change: I don't know if they're getting to saturation or what their issues are, but specifically, I can point to the competitive strategies we took starting February 1st of this year.

Speaker Change: Specifically on our customer base we upgraded the 200 make subscribers to 300 and our 500 make customers to 600.

Speaker Change: and I think customers have appreciated that surprise and delight.

John Rego: We also rolled out on September 1st simplified pricing that provides no contract, no data fees, no hidden fees. We also have an optional price block that gives that certainty to customers of what their bill will be over time as an option. So I think all of those things that we did competitively have helped us both on the top end of the sales funnel with Connects, as well as continuing to light our customers, which is why we're seeing very strong low-churn. So very low-churn. And then the third question I believe he had was around HSD ARPU, and we are pleased that we see ARPU up on a year-over-year basis.

Teresa Elder: We also rolled out, on September 1st, simplified pricing that provides no contract, no data fees, and no hidden fees. We also have an optional price block that gives customers certainty of what their bill would be over time as an option. So I think all of those things that we did competitively have helped us both at the top end of the sales funnel with Connex, as well as continuing to delight our customers, which is why we're seeing very strong, low churn. Very low churn.

Speaker Change: and appreciate the speeds that they're getting. We also rolled out on September 1st, simplified pricing that provides no contract, no

Speaker Change: We also have...

Speaker Change: optional price lock that gives that certainty to customers of what their bill would be over time as an option. So I think all of those things that we did competitively have helped us both on the top end of the sales funnel with Connect, as well as continuing to delight our customers which is why we're seeing very strong

Teresa Elder: And then the third question I believe we had was around HSD ARPU. And we are pleased that we see ARPU up on a year-over-year basis. I believe in the last quarter, the ACP did have a bit of a pull on our ARPU as we tried to place those customers who are especially cost-conscious into appropriate pricing. And, of course, the $30 subsidy went away.

Speaker Change: Low churn, so very low churn.

Speaker Change: And then the third question I believe he had was around HSD ARPU, and we are pleased that we see ARPU up on a year-over-year basis.

Batya Levy: I believe on the last quarter the ACP did have a bit of a pull on our ARPU; we tried to place those customers who are specially cost-conscious into appropriate pricing, and of course the $30 subsidy went away. But in general we are always balancing customer growth, turn with EBITDA and the revenue and ARPU growth. So I think I addressed the three questions, but I get it. Yep, that's helpful. Thank you. Okay, thanks, Batya.

Speaker Change: I believe on the last quarter, the ACP did have a bit of a pull on our ARPU as we tried to place those customers who are especially cost conscious.

Speaker Change: into appropriate pricing and, of course, the $30 subsidy went away. But, in general, we are always balancing customer growth, churn, with EBITDA and the revenue and ARPU growth.

Teresa Elder: But in general, we are always balancing customer growth and churn with EBITDA and revenue and ARPU growth. So, I think I've addressed the three questions. Did I understand you? Yes, that's helpful. Thank you. Okay, thanks, Bajra.

Speaker Change: So I think I addressed the three questions. Did I get it? Yes, that's helpful. Thank you. Okay. Thanks, Bhaja.

Frank Louthan: Our next question comes from the line of Frank Louthan with Raymond Jeans. Your line is open. Great. Thank you. Back to the ACP. I think last quarter, your guidance was inclusive of ACP losses. Just wanted to clarify your three or five thousand loss for Q3. Does that include ACP losses, or does not include them? And if you didn't include them, do you think you would be positive?

Frank Louthan: Our next question comes from the line of Frank Louthan with Raymond James. Your line is open.

Speaker Change: Our next question comes from the line of Frank Luthan with Raymond James, your life's open.

Teresa Elder: Great, thank you. Back to the ACP, I think last quarter your guidance was inclusive of ACP losses. Just wanted to clarify your 35,000 loss for Q3, does that include ACP losses, or does that not include them? And if you didn't include them, do you think you would be positive? And then I'm sure you don't want to discuss the deal, but is there a time frame that the deal's under and are you able to accept competing bids at the time, or are you actively looking for them as part of the process? If you can give us any color on that, that'd be great.

Frank Luthan: Great, thank you. Back to the ACP. I think last quarter your guidance was an inclusive of ACP losses. Just wanted to clarify your 35,000 loss for a Q3. Does that include ACP losses?

Speaker Change: or does that not include them, and if you didn't include them, do you think you would be positive?

Frank Louthan: And then I'm sure you won't want to discuss about the deal, but is there a time frame that this is that the deals under and are you able to accept competing bids at the time or reactively looking for them as part of the process. If you can give us any color on that, that would be great. Okay, so on the ACP, really our guidance last quarter was very much a guess because we didn't know what was going to happen with the dynamics of ACP. If you think about just a quarter ago, we were reporting. We really didn't know what the plans were, how it might filter out.

Speaker Change: And then I'm sure you don't want to discuss about the deal, but is there a time frame that the deal's under and are you able to accept competing bids at the time, or are you actively looking for them as part of the process? If you can give us any color on that, that'd be great.

Teresa Elder: Okay, so on the ACP, really, our guidance last quarter was very much a guess because we didn't know what was going to happen with the dynamics of the ACP. If you think about just a quarter ago when we were reporting, we really didn't know what the plans were, how they might filter out, so that was just a guess. So I don't think our guidance for the second quarter fully encompassed what might happen with ACP.

Speaker Change: Okay, so on the ACP, really our guidance last quarter was very much a guess because we didn't know what was going to happen with the dynamics of ACP. If you think about just a quarter ago we were reporting, we really didn't know what the plans were or how it might filter out. So that was a guess, so I don't think it's our guidance for a second quarter fully encompassed what might happen with ACP.

John Rego: So that was a guess. So I don't think our guidance for a second quarter fully encompassed what might happen with ACP. We've now started to see how our transition plans for those customers are working. And we've seen the amount of customers who are struggling and getting into non-paced data. So the negative of 3 to 5,000 that we're guiding to for the third quarter, I think, is better informed by what we've learned from the last couple of months with the ACP program gone. So last quarter it was not fully in our guidance. This quarter we feel more confident that we have a sense of the impact that it will make.

Teresa Elder: We've now started to see how our transition plans for those customers are working, and we've seen the amount of customers who are struggling and getting into non-pay status. So the negative 3 to 5,000 that we're guiding to for the third quarter is better informed by what we've learned from the last couple of months with the ACP program gone. So last quarter it was not fully in our guidance; this quarter, we feel more confident that we have a sense of the impact that it will make. And as for anything related to the unsolicited proposal, we really can't comment.

Speaker Change: We've now started to see how our transition plans for those customers are working and we've seen the amount of customers who are struggling and getting into non-pay status.

Teresa Elder: Okay, thank you. So the three of 5,000 that would include ACP losses, can you give us an idea of what that amount is? Is it more than 5,000 you think you're going to lose? Or how should we think about it? Yeah, I think until we get there, I can't.

Speaker Change: So the negative up to 3 to 5,000 that we're guiding to for the third quarter, I think is better informed by what we've learned from the last.

Speaker Change: Couple of months with the ACP program gone. So last quarter, it was not fully in our guidance. This quarter, we feel more confident that we have a sense of the impact that it will make. And asked for anything related to the unsolicited proposal, we really can't comment.

Frank Louthan: And asked for anything related to the unsolicited proposal. We really can't comment. Okay, thank you. But to be so, the 3 to 5,000 I said that would include ACP losses. Can you give us an idea of what that amount is? Is it more than 5,000? You think you're going to lose, or how should we think about it?

Speaker Change: Okay, thank you. But to be so, the 35,000 I said, would include ACP losses, can you give us an idea of what that amount is? Is it more than 5,000 you think you're going to lose or how should we think about it?

John Rego: Yeah, I think until we get there I can't break it down in great detail. But I can tell you we do feel good about how we have been stabilizing the legacy base through all the things I mentioned with the new simplified pricing and our optional price lock that churn reduction. YouTube TV, all of those things are definitely having a positive impact on the legacy base as well as the rapid penetration that we're seeing on the green field side. So we feel good about those forces that are all at play as well as managing the ACP.

Teresa Elder: Yeah, I think until we get there, I can't break it down in great detail. But I can tell you we do feel good about how we have been stabilizing the legacy base through all the things I mentioned with the new simplified pricing and our optional price lock, the churn reduction, YouTube TV, all of those things are definitely having a positive impact on the legacy base, as well as the rapid penetration that we're seeing on the greenfield side. So, you know, we feel good about those forces that are all at play, as well as managing the ACP. So, so more to come.

Speaker Change: Yeah, I think until we get there, I can't break it down in great detail. But I can tell you, we do feel good about how we have been stabilizing the legacy base.

Speaker Change: Through all the things I mentioned with the new simplified pricing and our optional price lock, the turn reduction, YouTube TV, all of those things are definitely having a positive impact on the legacy base, as well as the rapid penetration that we're seeing on the greenfield side.

Speaker Change: So, you know, we feel good about those forces that are all at play, as well as managing the ACP. So, more to come.

Frank Louthan: So more to come. Okay, thank you. Thanks, Frank.

Speaker Change: Okay, thank you. Thanks, Frank.

Desiree: There are no further questions at this time.

Operator: There are no further questions at this time. Ms. Elder, I turn the call back over to you.

Teresa Elder: Ms. Elder, I turn the call back over to you.

Speaker Change: There are no further questions at this time. Ms. Elder, I turn the call back over to you.

Teresa Elder: Okay, well, thank you so much for joining our call this afternoon, and we hope you have a great rest of your day.

Teresa Elder: Okay, well thank you so much for joining our call this afternoon, and we hope you have a great rest of your day.

Ms. Elder: Okay, well thank you so much for joining our call this afternoon, and we hope you have a great rest of your day.

Desiree: Ladies and gentlemen, this concludes today's conference call.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Desiree: You may now disconnect.

Speaker Change: Ladies and gentlemen, this concludes today's conference call, you may now disconnect.

Desiree: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operated today. At this time, I would like to welcome everyone to the Wide Open West Second Part of 2024 Earnings Call. All lines have been placed in mute to prevent any background noise. 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 followed by the number one on your telephone key chat. If you would like to withdraw your question, again, press the star one.

Andrew Posen: I would now like to turn the conference over to Andrew Posen, Vice President Head of Investor Relations. Please go ahead.

Andrew Posen: Good afternoon, everyone, and thank you for joining our second quarter of 2024 Earnings Call.

Andrew Posen: What's me today is Teresa Elder, who has chief executive officer and John Rego, while chief financial officer. Before we get started, I would like to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy, and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the Federal Security's law and are subject to known and unknown risks on certain days and other factors that may cause our actual operating results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements.

Andrew Posen: Your caution not to place undue reliance on such forward-looking statements. We disclaim any obligation to update such forward-looking statements. For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the risk factor section of our form 10K filed with the SEC, as well as the forward-looking statement section of our press release. In addition, please note that on today's call, and in the press release we issued this afternoon, we may refer to certain non-gap financial measures while the company believes these non-gap financial measures provide useful information for investors.

Andrew Posen: The presentation of this information is not intended to be considered an isolation or is a substitute for the financial information presented in accordance with GAP. Reconciliation between GAP and non-gap metrics for our historical reported results can be found in our earnings releases and our trending schedules, which can be found on our website.

Andrew Posen: We have also included a presentation this afternoon to complement our prepared remarks.

Teresa Elder: Now, I'll turn the call over to our Chief Executive Officer Theresa Elder. Thanks, Andrew.

Teresa Elder: Welcome to Wow's second quarter earnings call. Before we start, here is a brief update on the unsolicited non-binding acquisition proposal from Digital Bridge and Crest View Partners. A special committee of independent directors has been formed to evaluate the proposal, and the work of the committee is ongoing. Wow stockholders do not need to take any action related to the proposal at this time, and we do not have any updates to share today. We will take questions at the end of our remarks, however, we will not be taking any questions related to the unsolicited bid.

Teresa Elder: Now I would like to turn to our second quarter results. Our results this quarter were in line with our expectations and reflect momentum in our Greenfield fiber expansion and improvements in our legacy markets which were offset by the loss of subscribers due to the ending of the ACP program. As we have emphasized over the past several quarters, we are focused on growing our fiber footprint in our expansion markets, including both Greenfield and Edgeouts and stabilizing the losses in our legacy footprint.

Teresa Elder: This quarter, we made substantial progress on both fronts, excluding the impact of losses related to ACP. We would have reported a net gain of more than 300 high-speed data customers. Our second quarter results include high-speed data revenue of 105 million, down 1.6% year-over-year. Adjusted EBITDA of 70 million increased 2.8% year-over-year and an adjusted EBITDA margin of 44.1% was up 4.6% from the same period last year and 2.4% from last quarter. We have now fully realized the target of 35.5 million savings, more than a year ahead of schedule.

Teresa Elder: I am pleased with the progress that we continue to make, both in terms of growing our fiber business in new markets, while also reducing our cost base and managing expenses to drive adjusted EBITDA growth. During the second quarter, our fiber expansion proceeded well. We passed an additional 7,000 new homes in our Greenfield markets, bringing our total number of homes passed in Greenfield markets to 52,500. We also added 1900 new homes through Edgeouts.

Teresa Elder: Our expansion efforts are further driving our growth and continue to lay the foundation for our exciting future, providing exceptional quality fiber to the home broadband service with what we believe is the best value in the markets. The consistent improvement in our penetration rates across Edgeouts and Greenfields reinforces my conviction in our strategy. The penetration rates in our Greenfield markets increased nearly 3% to 15.4% up from 12.5% at the end of the first quarter.

Teresa Elder: Our Edgeouts are also performing extremely well, especially the 2024 vintage which increased to 38.6% growing over 6% from the end of last quarter. Our 2023 Edgeout vintage increased to a penetration rate of 28.6%, which is also a great improvement from last quarter. The 2022 vintage remains strong at 31%. I am pleased with further progress we made during the quarter with respect to our subscriber numbers. The ending of the ACP program resulted in a churn of 5,000 high-speed data subscribers, resulting in a total net loss of 4,700 high-speed data subscribers, excluding the ACP impact, HSD net odds increased by 300 subscribers.

Teresa Elder: I would like to break this down a little bit further to emphasize the progress we are making in our legacy footprint. Specifically, in the second quarter, our Greenfield markets added 2,400 new HSD subscribers. Excluding the 5,000 subs from ACP, the losses in our legacy markets accounted for a loss of 2,100 HSD subs, which is 1,000 fewer losses than the first quarter and a significant improvement from the fourth quarter of last year.

Teresa Elder: While there will be further impact from ACP in the third quarter, our efforts to keep those customers on our platform are mitigating some of these losses. Overall, we continue to see very low churn across our base and the strategic steps we introduced during the first quarter are continuing to show extremely positive results. Specifically, we introduced speed upgrades and our simplified pricing plan, which includes an optional price lock, modem included no data caps and no contracts.

Teresa Elder: The continued success of these strategies has given us additional confidence in the progress we are making to strengthen our subscriber numbers in our legacy footprint. The chart on the lower left quadrant of the slide shows customers buying in the lower tiers was consistent with last quarter as we worked to lower the impact from the ending of the ACP program. This resulted in a slight decrease in HSD, RPU relative to last quarter, although compared to the same period last year, RPU increased 2.6%.

Teresa Elder: The year-over-year increase was largely driven by last year's rate increase, as well as the impact of new customers buying higher speed tiers, especially in greenfield markets. As of the second quarter, we now have 485,000 HSD subscribers. As expected, our traditional video business declined further during the quarter, which will continue as we transition to YouTube TV. The success of this partnership is another factor that is contributing to the consistent low churn across our customer base. We are seeing a nice increase in customers buying an HSD YouTube TV bundle. A trend we expect to continue, especially in our expansion markets.

Teresa Elder: Our partnership provides a fantastic opportunity to offer more content at a much better value and to capitalize on the shift to video streaming, which we believe will also contribute to great results this year, to conclude before handing the call to John, I want to reiterate the key points that I made at the outset of the call. First, we continue to make great progress with our fiber-build in expansion markets, both in terms of passing new homes and increasing our penetration rates. And we are seeing ongoing progress with regard to stabilizing our numbers and our legacy footprint.

John Rego: I'll now turn the call over to John, who will go over our financial results in more detail. Thanks, Teresa. In the second quarter, we reported $105 million of HSD revenue, which decreased 1.6% year-over-year, largely reflecting the decrease in HSD subscribers due to ACP, as well as the impact of lower RPU during the quarter. Total revenue for the second quarter decreased 8% to 158.8 million, as video and telephony revenue dropped 26%, and 11.6% respectively, in addition to the decline in HSD revenue during the quarter.

John Rego: Adjusted EBITDA increased 2.8% from the same period last year to $70 million, with an adjusted EBITDA margin of 44.1%. The incremental contribution margin increased sequentially, and continued to grow year-over-year driven by the proportionate increase in HSD revenue, which increased to more than 66% of our total revenue this quarter, which is up from 62% in the same period last year. With respect to our cost structure alignment, we made significant progress this quarter and have now fully realized the target of 35.5 million more than a year ahead of schedule.

John Rego: In addition to these measures, we made further expense reductions, predominantly in our corporate and administrative areas, as we continue to focus on reducing our cost structure, which helped drive our adjusted EBITDA higher this quarter. We ended the quarter with total cash of $20.7 million, and total outstanding debt of $974.5 million, with our leverage ratio at 3.4 times. Our current cash position is largely in line with last quarter, as we continue to lower our cost space and manage working capital.

John Rego: We reported total capital spend of $51.1 million, down 12.5 million from last year, and down 21.4 million from last quarter. This reflects a significant decrease in expansion cap-ex. Our core cap-ex efficiency was 21.1% in the second quarter. Expansion cap-ex decreased 12.8 million from the same period last year, and 29.4 million from last quarter, as we emphasized lighting up homes we passed in increasing penetration in our expansion markets. In the second quarter, we spent 10.2 million on greenfields, 2.7 million on edge outs, and an additional 4.7 million on business services.

John Rego: We believe we are on track to spend no more than 60 million on greenfield expansion this year. Although the pace of greenfield construction has slowed down compared to Q1, it is in line with our cap-ex, and will continue to operate at a slower pace for the time being. We're currently exploring options to enhance our ability to accelerate our expansion initiatives. Specifically, we're actively exploring a number of options to secure additional funding.

John Rego: This process may or may not result in a near-term transaction. Our unleavened adjusted free cash flow which we define as adjusted EBITDA less CAPEX was 18.9 million for the second quarter. A significant improvement from last quarter driven by the reduction in expansion CAPEX.

John Rego: Finally, I'd like to provide our expectations for the third quarter. If Teresa indicated in her comments this morning, we're seeing positive indications from the steps we are taking to address the challenges in our legacy markets. However, we believe that our results in the third quarter will reflect a number of competing dynamics that may negatively impact our HSD subscriber numbers. First, we believe that there will be an additional ACP impact on our numbers this quarter.

John Rego: Secondly, we're anticipating reduction and capital spend on our expansion initiatives which could lower the number of HSD subscribers in these markets. As a result of these items, we expect our HSD net adds to be between negative 5,000 and negative 3,000. We believe HSD revenue will be between 106 million and 109 million. We expect total revenue for the third quarter to be between 157 million and 160 million and adjusted EBITDA to be between 67 million and 70 million.

John Rego: Thank you so much and now we're going to open up the line for some questions. Thank you.

Desiree: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone device to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speaker phone and your device, please pick up your handset to ensure that your phone is not unmute and asking your question. Again, press star one to join the queue.

John Rego: Your first question comes from the line of Brandon Nisple with Keybank Capital Market. Your line is open. Thanks for taking the questions, John. I was hoping you could go a little bit deeper in terms of the options you're exploring for liquidity. It looks like you ended the quarter with a fully drawn revolver and 20 million in cash and maybe level set us. What do you expect for free cash flow for the rest of the year and what does that mean in terms of new home expansion on greenfield for this year? Thanks.

John Rego: Okay, so thanks Brandon. A lot of in there so clearly we're managing our cash position. I think we did a great job of it in the second quarter. We've done a lot of different things that we mentioned on the call so we've lowered our op-ex and that's one of the reasons we were able to hit the three-year target of 35 and a half million early. We've gone beyond that. Clearly, we've not stopped but we've slowed the pace of capital spending in expansion and obviously we're managing our working capital so we've got lots of ways to preserve liquidity and I don't really feel we have any issues there.

John Rego: The theoretical possible funding options or any other options we would look at too early to give you great detail on that but the whole purpose of that would be to you know be able to expand the pace I think of expansion cat-backs. So right now we're on a pace to spend the 60 million for greenfield that we said we spent at the beginning of the year. We've already done about 51 million of it. That'll see any change at all in that and to the extent that you know we create some sort of transaction and think you'll see us expand that a bit. That's where we're at, right now.

John Rego: Great. Thank you for taking the question.

John Rego: Next question comes from the line of Batya Levy with UBS. Your line is open. Great. Thank you. Can you provide a little bit more color on HSD? Subscribe or trends? You're seeing specifically the guidance for third quarter. How much of that is you think related to ACP? Are you taking any reserves against that and should we assume it will be done by the end of third quarter? And a bit of color in terms of the competitive environment would be helpful in terms of fixed wireless. Are you seeing any incremental build from overbuilders or anything different from the cable side? And maybe lastly a bit more sort of how you're thinking about HSD output trends going forward would be helpful. Thank you.

John Rego: Thanks, Batya. So first of all on the HSD subscribers I think we're feeling very good about certainly this quarter we're talking about right now and that we would have had 300 net ad positive except for ACP. And I feel like we've been managing the ACP base quite well. At our peak we have 30,000 subscribers so certainly less exposure than than many of our peers out there. Specifically for the third quarter we will continue to see some impact from ACP and I can tell you well over half of the disconnects that we are seeing are customers who were in a non-paced status so they may have had all of their fees subsidized with the $30 or the majority of it but then when the subsidy went away with the ACP program they were no longer able to cover those.

John Rego: I think we've done a good job converting as many as possible into ongoing paying subscribers. We certainly are always balancing preserving EBITDA with throwing caution to the wind on ARPU and balancing that with customers. So for the third quarter we'll still seek some of that impact. It's hard to know exactly how much that will be which is why we've put the guide out there the way that we're seeing it. From I think your second question was around the competitive environment and I think things have shifted a bit in terms of the competitive environment.

John Rego: I think we've seen a softening of any competitive impact from fixed wireless as has been widely reported throughout the industry. I see I guess two reasons for that. One is just the fixed wireless providers themselves. I don't know if they're getting to saturation on the source or what their issues are but specifically I can point to the competitive strategies we took starting February 1st of this year. Specifically on our customer base we upgraded the 200-meg subscribers to 300 and our 500-meg customers to 600 and I think customers have appreciated that surprise and delight and appreciate the speeds that they're getting.

John Rego: We also rolled out on September 1st simplified pricing that provides no contract, no data fees, no hidden fees. We also have an optional price block that gives that certainty to customers of what their bill will be over time as an option. So I think all of those things that we did competitively have helped us both on the top end of the sales funnel with Connects as well as continuing to light our customers which is why we're seeing very strong low-churn.

John Rego: So very low-churn. And then the third question I believe he had was around HSD ARPU and we are pleased that we see ARPU up on a year-over-year basis. I believe on the last quarter the ACP did have a bit of a pull on our ARPU is we tried to place those customers who are specially cost-conscious into appropriate pricing and of course the $30 subsidy went away. But in general we are always balancing customer growth turn with EBITDA and the Revenue and ARPU growth. So I think I addressed the three questions, but I get it. Yep, that's helpful. Thank you.

John Rego: Okay, thanks, Batya.

John Rego: Our next question comes from the line of Frank Louthan with Raymond Jeans. Your line is open. Great. Thank you. Back to the ACP. I think last quarter, your guidance was inclusive of ACP losses. Just wanted to clarify your three or five thousand loss for Q3. Does that include ACP losses or does not include them? And if you didn't include them, do you think you would be positive?

John Rego: And then I'm sure you won't don't want to discuss about the deal, but is there a time frame that this is that the deals under and are you able to accept competing bids at the time or reactively looking for them as part of the process. If you can give us any color on that, that would be great. Okay, so on the ACP, really our guidance last quarter was very much a guess because we didn't know what was going to happen with the dynamics of ACP.

John Rego: If you think about just a quarter ago, we were reporting. We really didn't know what the plans were, how it might filter out. So that was a guess. So I don't think our guidance for a second quarter fully encompassed what might happen with ACP. We've now started to see how our transition plans for those customers are working. And we've seen the amount of customers who are struggling and getting into non-paced data.

John Rego: So the negative of 3 to 5,000 that we're guiding to for the third quarter I think is better informed by what we've learned from the last couple of months with the ACP program gone. So last quarter it was not fully in our guidance. This quarter we feel more confident that we have a sense of the impact that it will make.

John Rego: And asked for anything related to the unsolicited proposal. We really can't comment. Okay, thank you. But to be so the 3 to 5,000 I said that would include ACP losses. Can you give us an idea of what that amount is? Is it more than 5,000? You think you're going to lose or how should we think about it? Yeah, I think until we get there I can't break it down in great detail.

John Rego: But I can tell you we do feel good about how we have been stabilizing the legacy base through all the things I mentioned with the new simplified pricing and our optional price lock that churn reduction. YouTube TV all of those things are definitely having a positive impact on the legacy base as well as the rapid penetration that we're seeing on the green field side. So we feel good about those forces that are all at play as well as managing the ACP. So more to come. Okay, thank you. Thanks, Frank.

Desiree: There are no further questions at this time.

Teresa Elder: Ms. Elder, I turn the call back over to you. Okay, well thank you so much for joining our call this afternoon and we hope you have a great rest of your day.

Desiree: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.