Q2 2025 WideOpenWest Inc Earnings Call
Thank you for standing by. My name is Kayla and I will be your conference operator. Today at this time I'd like to welcome everyone to the Wide Open West second quarter 2025 earnings call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question again, press the star and 1, I would now like to turn the call over to Andrew Rosen vice president of investor relations you may begin.
Good afternoon everyone and thank you for joining our second quarter 2025 earnings call. I'm joined today by Teresa Elder while I was 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 laws and are subject to known and unknown risks, uncertainties and other factors that may cause our actual operating results financial position or performance can be materially different from those expressed or implied in our forward-looking statements, your cost should 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. 10 K filed with the FCC 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 final information. Presented in accordance with gaap reconciliation, between gaap and non-gaap metrics for 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 to Risa Elder
Thanks, Andrew. Welcome to WOW!'s second quarter earnings call.
B v. Before we review our second quarter results, I would like to spend a couple of minutes discussing this afternoon's announcement.
Earlier this afternoon, we announced that we have entered into a definitive agreement under which Affiliated investment funds of digital Bridge, Investments, and press view, Partners, will acquire all of the outstanding shares of common stock of. Wow, not already owned by Crestview and its Affiliates for $5.
2020 cents per share in an all-cash transaction with an Enterprise value of approximately 1.5 billion.
Chris view, our largest stockholder has agreed to roll over all of the shares of wow, common stock that they own.
Affected price of $3.79 prior to the May 2nd, 2024 offer, represents a 63% premium to Friday's close, which we believe is a very good offer for investors.
The transaction is expected to close by the end of the year or in the first quarter of 20126 subjects to the satisfaction of the closing conditions.
Including the receipt of wow, stockholder approval, and of required regulatory approval.
More information will be available when we file the proxy materials in the near future.
We also reached an
to amend and extend our current revolving credit facility.
This amendment provides for our revolver to be extended. For 6 months beyond the current term, which expires at the end of 2026,
In addition conditional on the closing of the sale to digital bridge. In Crestview, the revolver will be further extended through September 11th 2028.
The full terms of the amended agreement will be disclosed in an upcoming Form 8K to be filed with the FCC.
Now, I would like to review our second quarter results, which reflects strong momentum in our Greenfield markets, building on the success. We delivered in the first quarter.
We maintained strong penetration rates of 16%.
All while growing our Footprints with an additional 15,500. New Greenfield, homes passed during the quarter. We're pleased with the progress of our all fiber new builds in Central Florida, Hernando Beach Florida, Brighton, Michigan and Greenville South Carolina, which have clearly demonstrated consumer's, desire for exceptional, fiber to the home broadband that delivers high speeds, at lower costs, with exceptional customer service.
In the second quarter high-speed data Revenue. Decreased slightly year-over-year to 104.8 million adjusted. Evida of 70.3 million increased slightly year-over-year while adjusted to the margin increased from the prior year to 48.8%.
Greenfield expansion efforts further drove growth in our footprint, all while maintaining a penetration rate of 16% in our Greenfield markets.
During the second quarter, we passed an additional 15,500 homes in our Greenfield markets, bringing our total number of Greenfield homes passed to 91,100. Our success in these markets includes strong selling in the higher speed tiers, which demonstrates the high quality and value of the product we're bringing to Market.
The 2025 Edge out vintage passed an additional 3500, new homes in the second quarter. Bringing the total vintage to 5,000 homes, while growing penetration to 28%.
Our 2024 Edge out vintage increased, with its penetration rate at 45.8%. Meanwhile, the 2023 vintage remained flat at 31.4%.
Our expansion efforts include both our Green Field and Edge Out markets. All markets are performing extremely well, supporting our growth strategy as we move into the second half of the year.
With regard to our hsd subscribers. We lost a total of 3,900 during the quarter.
We added 2,300 HSB subscribers in our Greenfield markets, and 1100 in our Edge out expansion markets, which partially offset. The drop in our Legacy footprint.
Importantly.
We are now seeing the growth of subscribers in our Green Field markets.
Coupled with improving subscriber dynamics in our legacy markets.
Pushing us.
Significantly closer to hitting the inflection point where our net adds return to positive.
The steps we introduced last year such as complimentary speed upgrades and our simplified pricing plans which include an optional price lock, modem included, no data caps and no contracts are continuing to benefit our business in both our Legacy and expansion markets.
Slide highlight a shift that reflects the growing success of our fiber expansion strategy, as well as the impact of our initiatives to strengthen our Legacy footprint.
Our POO was another record high, increasing 4.9% year-over-year to $75.30.
Predominantly reflecting the impact of a rate increase that went into effect on June 1st, as well as demand for higher speed tiers which continues to grow with 76% of hsd, only new connects, purchasing 500 Meg or higher. During the second quarter, a 4% increase year-over-year.
Over. We continue to see the success of our simplified pricing strategy which is showing particular strengths in our Greenfield Market.
As expected, our traditional video business declined further during the quarter and has now dropped to 42,500 subscribers, a 40.6% decrease from the same period last year.
We anticipate this trend will continue as we transition to YouTube TV to align our total product offering with current market trends.
As a result of our declining traditional video business. Overall operating expenses, decreased slightly year-over-year reflecting the lower number of video subscribers.
The lower cost base in our Legacy business. Enables us to maximize investment in our Green Field expansion initiative which partially offsets the decrease in the Legacy operating expenses and aligns our cost base with our core strategy.
To conclude before handing the call to John, I would like to emphasize how our results. This quarter reflect momentum. In our Green Field expansion, as we continue to focus on our fiber to the home expansion. While maintaining a commitment to cost discipline and effective pricing strategy that again resulted in a record high rpu while showing improvements in our hfd subscriber Trends. Moving us nearer to positive net, add infection points.
I will now turn the call over to John, who will go over our financial results in more detail.
Thank you, Teresa, and the second quarter, we reported 104.8 million of HSC Revenue, which decreased 2% year-over-year. Largely reflecting the decrease in HSC subscribers
Total revenue for the second quarter, decreased 9.2% to 144.2 million as video and telephony. Revenue dropped 39.9% and 10.3%. Respectively. In addition to the slight decline in hsd Revenue during the quarter,
Adjusted, Evita increased 0.4% for the same period last year to 70.3% margin remains strong at 48.8%.
The year-over-year growth in our adjusted, even a reflects the impact of our continued approach to aggressively, restructure our business away from our video platform.
And although integration increased from the same period last year, we saw the benefit this quarter from the lower number of video subscribers, which is now reflected in lower programming costs and video support costs.
As we said last quarter cost associated with this, restructuring, will continue to come down as we execute our Broadband strategy.
The incremental contribution margin increased over 2 percentage points from the previous quarter and continues to grow year-over-year, driven by the proportionate increase in HSC revenue, which increased to 72.7% of our total revenue this quarter, up from 66.1% in the same period last year.
We ended the quarter with total cache of 31.8 million and total outstanding debt of 1.05 billion. With our leverage ratio at 3.5 times, we reported total Capital spend of 47.9 million down, 3.2 million from the same quarter last year. Our core capex efficiency was 18.9% in the second quarter.
Expansion capex, increased 3 million from the same period last year and 5.9 million from last quarter.
And the second quarter, we spent 14.1 million on green fields and remain on track to spend between 60 and 70 million in 2025.
Additionally, we spent 4.3 million on edge outs and 2.2 million on Business Services.
CapEx was $22.4 million for the second quarter.
A decrease from last quarter driven by lower ebitda and increased expansion, capex spend
Finally, before we open the line for questions due to this afternoon's transaction announcement, we will not be providing guidance for the third quarter. Thank you very much, and now we will open up the line for questions.
at this time, I'd like to remind everyone in order to ask a
Star then the number 1 on your telephone keypad. Your first question comes from the line of Frank loan with Raymond James. Your line is open.
Great, thank you and congratulations on uh, on getting the deal done. Um, going forward, what's the plan, uh, to continue with the Greenfield bills or Edge outs? Or is it going to be a broader expansion? Just just curious what the what what the the longer term plan is for the business.
Thanks Frank. Um, yes. Um, uh, we, I would direct you to the press release that, um, was put out right before this call. Um, our focus is now making sure we continue to run the business very well while also going through all of the appropriate approvals with stockholders and uh with the regulatory um authorities to get us to the close and then the the future really of the company. Um I will leave that to um digital bridge and Crestview to talk about and um once again refer you to the quotes that are in the back.
Document.
Okay. And what is the the time I think you the the release had some time frames for the close is there anything that would you know would make that materially longer any? Any any potential concerns you would have from a regulatory perspective or anything like that?
Uh, not that we know of right now, but I think, uh, what we referenced was, it could be later this year or first quarter is our estimate. Of course, no, 1 can completely predict but that's the estimate.
Okay. Thank you very much and congratulations. And we've been working on it for a long time. Thanks Frank.
And your next question comes from the line of botcha Levy with UBS your line is open.
Great, thank you. Um, so we said
Can you provide a little more color on your strategic review? Since the initial on solicited off for you got to bring it to this decision and I I think the deal implies maybe a low 5 multiple um the thoughts around that. In terms of, if you could give us maybe a 5 versus cable, mix of the footprint would be helpful and is there a breakout for you that we should consider?
Yeah, I will, um, have to direct you to the documents that will be filed. Um, as we put out the proxy, there will be lots of detail in all of those. What I can tell you in terms of the process is, as you know, the non-binding unsolicited purchase proposal came in from Digital Bridge and Krusty Partners in May.
Day of last year. At that time, a special Committee of Wells board of directors was formed that included the um non-crew Affiliated board members and I can tell you the special committee had a very thorough and diligent process. And from that process they um unanimously uh recommended the author presented by digital bridge and uh Crestview to the board and then the board unanimously approved that so um there will be more detail as the uh proxy comes out.
Got it. Thank you. Maybe just a quick 1 on capex. Should we assume that you will? You will continue at least, on this year's plans to, um, build out to Edge out and Greenfield. Yes, there's no change in this year's, uh, capex plan. And, um, so I think, you know, the strategy of the company clearly was, um, uh, reflected in the bid that we got and the comments from those companies.
And all of your um so roughly 2 million homes passed. What percent is is directly 500 to the home.
I'm not sure if we've broken that out. I can tell you certainly. Um, all of the 901,100 I think is where we're at in as of the end of the second, uh the third quarter, I'm sorry, the second quarter, all of those are uh fiber to the home and then we also have some within our Legacy footprint as well. But the bulk of them are in our Greenfield markets.
Okay, thank you very much.
And there are no further questions at this time. Teresa Elder, I'll turn the call back over to you.
For dialing in today. And before we close, I just want to thank the people of. Wow, whose passion for wowing, our customers, inspires me every day. And as always, we appreciate you joining our earnings call today and we appreciate your interest in. WoW,
this concludes today's conference call, you may now disconnect