Financial Data and Key Metrics Changes - Reported revenue grew 1.2% year-over-year in Q1 2021, with adjusted EBITDA increasing by 4.2% and achieving an adjusted EBITDA margin of 43.4% [6][26] - Free cash flow performance reached over $0.5 billion, growing 82% year-over-year, marking the highest level of Q1 free cash flow [7][28] - Adjusted EBITDA margin excluding mobile losses was 44.1%, up from 43.1% a year ago, indicating improved profitability [26] Business Line Data and Key Metrics Changes - Residential revenue grew 1.3% year-over-year, supported by strong customer growth [8] - Business services revenue increased by 0.7%, showing early signs of recovery from the pandemic [24] - News and advertising revenue remained flat year-over-year, a notable achievement given the tough comparison to the previous year [25] Market Data and Key Metrics Changes - The company passed over one million homes with fiber-to-the-home, representing about 20% of its footprint [8][18] - Average monthly data usage per customer increased by 39% year-over-year, with broadband customers averaging over 600 gigabytes per month [15] - The penetration of 1-gigabit broadband customers increased to 9.8%, up from 2.4% a year ago, indicating strong demand for higher-speed services [17] Company Strategy and Development Direction - The company is focused on expanding its fiber network and anticipates passing an additional 0.5 million homes this year [18][20] - Recent acquisitions, including Morris Broadband, are expected to enhance growth opportunities and improve margins [21][23] - The company aims to continue its strategy of upselling higher-speed broadband services to improve customer satisfaction and reduce churn [19][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving customer growth in the second half of the year, despite a seasonally weaker second quarter [12] - The company is optimistic about the impact of federal stimulus programs on customer payments and overall growth [39][75] - Management noted that competitive dynamics remain stable, with no significant changes in market share despite aggressive promotions from competitors [68] Other Important Information - The company has received an upgrade from S&P to a corporate issuer rating of BB with a stable outlook, reflecting improved operational execution [30] - Cash taxes are expected to increase later in the year, but the Morris Broadband acquisition may provide some tax benefits [29][66] Q&A Session Summary Question: Confidence on full-year adds and homes available for sale - Management is on track to upgrade 400,000 Suddenlink homes and expects to see increased penetration opportunities [35] Question: Expectations for federal stimulus - Management is prepared to leverage federal stimulus funds for broadband subsidies but is cautious about predicting specific impacts [42][75] Question: Competition from fixed wireless services - Management does not anticipate significant challenges from fixed wireless in their footprint, citing strong customer demand for their broadband services [62] Question: Impact of regulatory proposals on business - Management noted that low-income broadband products are already in place and that most customers tend to upgrade to higher tiers [63] Question: Insights on fiber penetration and financial benefits of upgrades - Management indicated that customer satisfaction is significantly higher for fiber customers, and upgrades to higher tiers provide attractive financial benefits [70][72]

Altice USA, Inc. (NYSE:ATUS) Q4 2020 Earnings Conference Call February 10, 2021 4:30 PM ET Company Participants Nick Brown - Investor Relations Dexter Goei - Chief Executive Officer Mike Grau - Chief Financial Officer Conference Call Participants Phil Cusick - JPMorgan Craig Moffett - MoffettNathanson Doug Mitchelson - Credit Suisse Michael Rollins - Citi John Hodulik - UBS Brett Feldman - Goldman Sachs Benjamin Swinburne - Morgan Stanley Kannan Venkateshwar - Barclays Andrew Beale - Arete Research Frank Lo ...

Financial Performance - Altice USA's Q3 2020 revenue decreased by 0.2% year-over-year to $2.434 billion[65], but increased by 3.0% when adjusted for RSN credits[5, 7] and 3.7% when further adjusted for storm credits[5, 7] - Adjusted EBITDA increased by 5.5% year-over-year[5, 65], or 6.3% excluding mobile losses[5, 39], and 7.7% excluding mobile and storm credits[5, 39] - Free Cash Flow (FCF) increased significantly by 176% year-over-year[5, 49] to $458 million in Q3 2020[49], with year-to-date FCF reaching $1.46 billion[5, 49], an 82% increase year-over-year[49] Subscriber Growth and Network - The company added 26,000 broadband subscribers in Q3[5, 12], or 32,000 excluding storm impacts[5], and 62,000 including the SECO acquisition[5] - Altice completed its 1 Gig rollout to 100% of its Optimum footprint[5], achieving 92% coverage across Altice USA[5] - Broadband speed upgrade volume increased by 44%[16] and average data usage per customer increased[16] compared to Q3 2019[18] Business Segments - Business Services revenue grew by 1.3% year-over-year[7, 31], with Lightpath revenue growing by 2.6% year-over-year[31] - News & Advertising revenue increased by 5.2% year-over-year to $124 million[7, 35] Capital Allocation and Debt Management - The company repurchased $449 million in shares during Q3[5], bringing the year-to-date total to $1.8 billion[5], and raised its full-year target to ≥$2.0 billion[5] - Altice refinanced $2.7 billion of CSC debt at record-low coupons[5, 59] and completed debt financing for Lightpath at a weighted average cost of debt (WACD) of 4.3%[5] Outlook - Altice USA reiterated its full-year 2020 financial outlook, expecting revenue and Adjusted EBITDA growth, capital expenditures less than $1.3 billion[5, 60], and leverage between 4.5x and 5.0x[5, 60]

Financial Data and Key Metrics Changes - Total revenue was flat year over year, with an adjustment for anticipated regional sports network credits; without this adjustment, revenue would have grown by 3% in Q3 [6][8] - Adjusted EPS growth accelerated to 5.5% year over year, or 6.3% excluding mobile, and up to 7.7% for the year when adjusting for storm impacts [7][18] - Free cash flow reached $458 million, a 176% increase year over year, contributing to $1.46 billion in free cash flow year to date, surpassing the $1.2 billion generated for the full year of 2019 [7][21] Business Line Data and Key Metrics Changes - Broadband revenue grew by 15.6% year over year, with 26,000 new broadband customers added, despite storm disruptions [6][9] - Business services revenue grew by 1.3% year over year, with a stronger performance in SMB and enterprise segments [15][16] - News and advertising revenue increased by 5.2% year over year, showing recovery from previous declines [17] Market Data and Key Metrics Changes - Residential revenue declined by 1.6% year over year, but would have grown by 2.3% when adjusted for sports credits [8] - The company added 8,000 residential customers in the quarter, with a total of 32,000 broadband additions when excluding storm impacts [9][10] - The average monthly data usage per customer increased by 44% year over year, indicating higher demand for broadband services [11] Company Strategy and Development Direction - The company completed its one-gig rollout, making the service available across the entire New York Tri-State area, which is expected to drive further customer growth [12][13] - Focus remains on upgrading existing networks and expanding footprint, with plans to pass over 900,000 homes for fiber service [13][14] - The company is exploring M&A opportunities to expand its cable footprint and has filed for the upcoming FCC auction to invest in rural network builds [14][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strength of the core business and anticipated revenue and adjusted EPS growth for the year [7][25] - The impact of hurricanes on operations was acknowledged, but the company remains focused on recovery and growth [6][18] - Management indicated that they expect to maintain guidance for revenue and adjusted EBITDA growth, with a target for cash capex of less than $1.3 billion [24][25] Other Important Information - The company raised its share repurchase target to at least $2 billion for the full year, up from $1.7 billion previously [7][25] - Adjusted EBITDA margin improved to 46.3%, up 200 basis points year over year, reflecting operational efficiencies [18][19] - The company is managing its balance sheet proactively, with a focus on reducing capital spending in the long term [20][24] Q&A Session Summary Question: Guidance for revenue and EBITDA growth in Q4 and 2021 - Management anticipates accelerated growth in Q4, despite some headwinds from adjustments related to regional sports network credits [27][28] Question: Breakdown of broadband ARPU and margin expectations - Broadband revenue growth was approximately 15.5%, with expectations for continued margin improvement as the focus shifts from video to broadband [32][33] Question: Competitive dynamics in the fiber market - Management noted strong performance against competitors, with no significant changes in competitive behavior observed [35][36] Question: Fiber rollout costs and operational efficiencies - The company is still in the early stages of fiber rollout, with ongoing efforts to improve connection efficiencies and customer adoption [38][39] Question: Use of proceeds from recent transactions and M&A landscape - Management indicated a favorable environment for potential M&A opportunities among smaller cable companies, focusing on contiguous regions and under-penetrated assets [52][53]

PART I. FINANCIAL INFORMATION This section provides a comprehensive overview of the company's financial performance and position [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited consolidated financial statements for Altice USA, Inc., covering balance sheets, operations, cash flows, and comprehensive notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Consolidated Balance Sheet Summary (in thousands) | Account | Sep 30, 2020 (Unaudited) | Dec 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $1,606,886 | $1,381,356 | | Total assets | $33,900,012 | $34,108,122 | | **Liabilities & Equity** | | | | Total current liabilities | $1,961,707 | $1,978,479 | | Long-term debt, net | $25,476,051 | $24,249,603 | | Total liabilities | $33,138,659 | $31,720,309 | | Total stockholders' equity | $745,343 | $2,279,262 | - Total assets slightly decreased, while total liabilities increased, primarily due to a rise in long-term debt, leading to a significant reduction in total stockholders' equity from **$2.28 billion** to **$745 million**, driven by share repurchases and changes in paid-in capital[10](index=10&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenue, operating income, net income, and diluted EPS Consolidated Statements of Operations Summary (in thousands, except per share amounts) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,433,986 | $2,438,662 | $7,359,221 | $7,286,310 | | Operating Income | $549,293 | $471,515 | $1,506,570 | $1,396,536 | | Net Income (Loss) | $(2,729) | $77,396 | $107,210 | $138,608 | | Diluted EPS | $(0.01) | $0.12 | $0.18 | $0.21 | - For the nine months ended Sep 30, 2020, revenue increased slightly year-over-year, and operating income grew by **7.9%**; however, net income decreased from **$138.6 million** to **$107.2 million**, impacted by significant losses on extinguishment of debt and derivative contracts during the period[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=16&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details cash flows from operating, investing, and financing activities over the reporting period Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Category | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,188,661 | $1,833,987 | | Net cash used in investing activities | $(874,665) | $(1,202,741) | | Net cash used in financing activities | $(1,030,308) | $(753,967) | | Net increase (decrease) in cash | $282,165 | $(123,686) | - Cash from operations increased by **19.3% YoY** for the nine-month period, while investing activities saw reduced cash use due to lower capital expenditures (**$729 million** in 2020 vs **$1.03 billion** in 2019), and financing activities used more cash, driven by significant share repurchases (**$1.81 billion**) despite net positive debt issuance activity[37](index=37&type=chunk)[38](index=38&type=chunk) [Notes to Consolidated Financial Statements](index=26&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, and other financial disclosures - In July 2020, the company agreed to sell **49.99%** of its Lightpath fiber enterprise business for an implied enterprise value of **$3.2 billion**, expecting to receive approximately **$2.3 billion** in gross cash proceeds and retain a **50.01%** controlling interest[58](index=58&type=chunk) - For the nine months ended September 30, 2020, the company repurchased **73.9 million** shares of Class A common stock for approximately **$1.83 billion**, with approximately **$2.98 billion** remaining available under the share repurchase program as of September 30, 2020[57](index=57&type=chunk) - The company engaged in significant debt refinancing activities during the quarter, including issuing new senior notes and using proceeds to redeem higher-coupon notes, resulting in a loss on extinguishment of debt of **$250.5 million** for the nine-month period[87](index=87&type=chunk)[88](index=88&type=chunk)[92](index=92&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=47&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses operational and financial performance, including revenue trends, Adjusted EBITDA, liquidity, and capital resources [Results of Operations](index=49&type=section&id=Results%20of%20Operations) This section analyzes revenue and expense trends by segment, highlighting key drivers of financial performance and Adjusted EBITDA Revenue by Segment - Nine Months Ended Sep 30 (in thousands) | Revenue Segment | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Residential: Broadband | $2,747,129 | $2,396,151 | 14.6% | | Residential: Video | $2,766,608 | $3,028,914 | -8.7% | | Residential: Telephony | $358,347 | $452,927 | -20.9% | | Business services & wholesale | $1,092,309 | $1,066,123 | 2.5% | | News and advertising | $326,348 | $327,255 | -0.3% | | Mobile | $57,944 | $3,174 | 1725.6% | | **Total Revenue** | **$7,359,221** | **$7,286,310** | **1.0%** | - Broadband revenue growth of **15%** for the nine-month period was driven by higher average recurring revenue per customer and an increase in the number of broadband customers[145](index=145&type=chunk) - Video revenue decreased by **9%** for the nine-month period, primarily due to a decline in video customers and estimated customer credits of approximately **$76.7 million** related to undelivered sports programming[146](index=146&type=chunk) Reconciliation of Net Income to Adjusted EBITDA - Nine Months Ended Sep 30 (in thousands) | Line Item | 2020 | 2019 | | :--- | :--- | :--- | | Net income | $107,210 | $138,608 | | Adjustments (Taxes, Interest, D&A, etc.) | $3,156,624 | $3,041,863 | | **Adjusted EBITDA** | **$3,263,834** | **$3,180,471** | [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial resources, leverage targets, asset sales, and capital expenditure plans - The company targets a year-end leverage ratio of **4.5x** to **5.0x** for its CSC Holdings debt silo, believing existing cash, operating cash flows, and credit facility availability are adequate to support operations, capital expenditures, and debt service for the next twelve months[178](index=178&type=chunk) - In July 2020, the company agreed to sell **49.99%** of its Lightpath business, expecting gross cash proceeds of approximately **$2.3 billion**, which may be used for debt repayment, share repurchases, or other investments[181](index=181&type=chunk) Capital Expenditures (Cash Basis, in thousands) | Category | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Customer premise equipment | $127,667 | $267,408 | | Network infrastructure | $366,877 | $459,594 | | Support and other | $142,984 | $176,313 | | Business services | $91,849 | $129,240 | | **Total Capital Purchases** | **$729,377** | **$1,032,555** | [Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to equity price risk from its Comcast common stock holdings, hedged with derivatives, and interest rate risk on variable-rate debt, managed with swaps - The company holds Comcast common stock with a fair value of **$1.99 billion** as of September 30, 2020, a position hedged with prepaid forward contracts to monetize value and limit downside price risk[207](index=207&type=chunk) - The company uses interest rate swaps with a total notional value of **$6.85 billion** as of September 30, 2020, to manage exposure to floating interest rates, with changes in fair value recorded in the statement of operations as these swaps are not designated as hedges[211](index=211&type=chunk)[212](index=212&type=chunk) - A hypothetical **100 basis point (1%)** decrease in interest rates would increase the estimated fair value of the company's fixed-rate debt by approximately **$719 million**[210](index=210&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded the company's disclosure controls and procedures were effective as of September 30, 2020 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[214](index=214&type=chunk)[215](index=215&type=chunk) - There were no changes in internal control over financial reporting during the period that have materially affected, or are reasonably likely to materially affect, the company's internal controls[216](index=216&type=chunk) PART II. OTHER INFORMATION This section covers non-financial disclosures such as legal proceedings, risk factors, and equity security transactions [Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several legal proceedings, including class action lawsuits from IPO stockholders and patent infringement lawsuits by Sprint - The company is defending against class action lawsuits from IPO stockholders alleging misrepresentation in the Registration Statement, with a state court case on appeal and a federal case ongoing[126](index=126&type=chunk)[127](index=127&type=chunk) - Sprint Communications has filed two patent infringement lawsuits against the company related to Voice over Internet Protocol (VoIP) and Video-on-Demand (VOD) services[127](index=127&type=chunk) [Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors) This section updates the company's risk factors, highlighting potential adverse effects of the COVID-19 pandemic and future stock sales - The COVID-19 pandemic is identified as a significant risk that could materially impact the business through reduced demand, customer inability to pay, and potential delays in capital investments like the FTTH buildout[219](index=219&type=chunk) - A substantial sale of Class A common stock by existing major stockholders, or the perception of such a sale, could cause the stock's market price to decline[219](index=219&type=chunk)[220](index=220&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's share repurchase activities and the remaining authorization under its buyback programs Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2020 | 2,274,781 | $24.15 | | August 2020 | 9,110,608 | $27.00 | | September 2020 | 5,583,599 | $26.49 | | **Total Q3** | **16,968,988** | **$26.53 (weighted avg)** | - As of September 30, 2020, the company had approximately **$2.98 billion** remaining under its authorized share repurchase programs[222](index=222&type=chunk)