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High-Speed Data Revenue: $105 million, down 1.6% year over year.
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Adjusted EBITDA: $70 million, increased 2.8% year over year.
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Adjusted EBITDA Margin: 44.1%, up 4.6 percentage points from last year.
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Total Revenue: $158.8 million, decreased 8% year over year.
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Video Revenue Decline: 26% decrease.
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Telephony Revenue Decline: 11.6% decrease.
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Total Cash: $20.7 million.
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Total Outstanding Debt: $974.5 million.
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Leverage Ratio: 3.4 times.
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Total Capital Spend: $51.1 million, down $12.5 million from last year.
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Unlevered Adjusted Free Cash Flow: $18.9 million for the second quarter.
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Homes Passed in Greenfield Markets: 52,500 total, with 7,000 new homes added.
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Penetration Rate in Greenfield Markets: Increased to 15.4% from 12.5% last quarter.
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HSD Subscribers: 485,000 total, with a net loss of 4,700 due to ACP impact.
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ARPU Increase: 2.6% year over year.
Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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WideOpenWest Inc (NYSE:WOW) achieved a 2.8% year-over-year increase in adjusted EBITDA, reaching $70 million, with an improved margin of 44.1%.
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The company successfully realized $35.5 million in cost savings more than a year ahead of schedule, contributing to EBITDA growth.
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WOW’s fiber expansion is progressing well, with 7,000 new homes passed in greenfield markets and 1,900 through edge-outs, totaling 52,500 homes.
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Penetration rates in greenfield markets increased to 15.4%, and edge-outs, particularly the 2024 vintage, saw significant growth to 38.6%.
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The partnership with YouTube TV is contributing to low churn rates and offers a strategic advantage in transitioning customers to streaming services.
Negative Points
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High-speed data (HSD) revenue decreased by 1.6% year over year, largely due to the loss of subscribers from the ending of the ACP program.
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Total revenue for the second quarter fell by 8% to $158.8 million, with significant declines in video and telephony revenue.
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The company experienced a net loss of 4,700 high-speed data subscribers, primarily due to the ACP program’s conclusion.
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WOW’s leverage ratio stands at 3.4 times, with total outstanding debt of $974.5 million, indicating a significant debt burden.
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The company anticipates further negative impacts on HSD subscriber numbers in the third quarter due to ongoing ACP effects and reduced capital spend on expansion initiatives.
Q & A Highlights
Q: Can you elaborate on the liquidity options you’re exploring, given the current cash position and fully drawn revolver? What are your expectations for free cash flow and greenfield home expansion for the year? A: John Rego, CFO: We’re managing our cash position effectively, having lowered OpEx and slowed capital spending. We’re on track to spend $60 million on greenfield expansion this year, with $51 million already spent. We’re exploring funding options to potentially accelerate expansion, but it’s too early for details.
Q: Can you provide more color on HSD subscriber trends and the impact of the ACP program? How is the competitive environment affecting you, and what are your expectations for HSD ARPU trends? A: Teresa Elder, CEO: We would have had a net gain of 300 HSD subscribers without the ACP impact. Over half of the ACP-related disconnects were non-paying customers. The competitive environment has softened, particularly from fixed wireless. Our strategies, including speed upgrades and simplified pricing, have helped maintain low churn. HSD ARPU is up year-over-year, despite a slight pullback due to ACP.
Q: Does the guidance for a 3,000 to 5,000 HSD subscriber loss in Q3 include ACP losses? If not, would you be positive? A: Teresa Elder, CEO: The guidance includes ACP losses. Last quarter’s guidance didn’t fully account for ACP dynamics, but we’ve since learned more about its impact. We feel confident in our current guidance, which reflects our understanding of the ACP’s effect.
Q: Are there any updates on the unsolicited acquisition proposal? Is there a timeframe or possibility for competing bids? A: Teresa Elder, CEO: We cannot comment on the unsolicited proposal or any potential timeframe or competing bids.
Q: How are you managing the ACP impact on your subscriber base, and what measures are you taking to stabilize your legacy footprint? A: Teresa Elder, CEO: We’ve been converting ACP customers to paying subscribers and managing churn with strategies like simplified pricing and YouTube TV partnerships. These efforts are stabilizing our legacy base and driving penetration in greenfield markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
