ATN International(ATNI) - 2025 Q2 - Quarterly Report

Cautionary Statement Regarding Forward-Looking Statements This statement advises that the report contains forward-looking information, subject to risks that could cause actual results to differ materially, and the Company disclaims any obligation to update these statements Forward-Looking Statements This section details that the report includes forward-looking statements about future performance and plans, listing various risk factors that could cause actual outcomes to differ, with no obligation for the Company to update them - The report contains forward-looking statements about future financial performance, business goals, strategic investment plans, revenues, operating income, cash flows, and capital investments[8] - Actual future events and results could differ materially due to factors such as general operational performance, reliance on key suppliers, ability to satisfy major carrier customers, network expansion capabilities, technological changes, access to capital, government regulations, economic downturns, management transitions, and increased competition[8] - The Company undertakes no obligation to update these forward-looking statements, except as required by law[8] PART I—FINANCIAL INFORMATION This part presents the Company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations Item 1. Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for ATN International, Inc. and its subsidiaries, providing a snapshot of the company's financial health and performance Condensed Consolidated Balance Sheets This section presents the unaudited condensed consolidated balance sheets, detailing assets, liabilities, and equity for the specified periods Condensed Consolidated Balance Sheets (In Thousands) | ASSETS (June 30, 2025) | Amount ($) | ASSETS (December 31, 2024) | Amount ($) | | :----------------------- | :--------- | :--------------------------- | :--------- | | Cash and cash equivalents | 98,965 | Cash and cash equivalents | 73,393 | | Total current assets | 327,752 | Total current assets | 309,161 | | Fixed assets, net | 1,010,631 | Fixed assets, net | 1,040,193 | | Total assets | 1,707,006 | Total assets | 1,727,103 | | LIABILITIES & EQUITY | | LIABILITIES & EQUITY | | | Total current liabilities| 269,024 | Total current liabilities | 267,314 | | Long-term debt, excluding current portion | 568,548 | Long-term debt, excluding current portion | 549,130 | | Total liabilities | 1,060,519 | Total liabilities | 1,055,349 | | Total equity | 567,772 | Total equity | 595,451 | Condensed Consolidated Statements of Operations This section presents the unaudited condensed consolidated statements of operations, outlining revenues, expenses, and net income (loss) for the specified periods Condensed Consolidated Statements of Operations (In Thousands, Except Per Share Data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $181,300 | $183,281 | $360,594 | $370,076 | | Total operating expenses | $181,067 | $158,965 | $357,694 | $341,186 | | Income from operations | $233 | $24,316 | $2,900 | $28,890 | | Income (loss) before income taxes | $(13,036) | $11,541 | $(24,614) | $5,213 | | NET INCOME (LOSS) | $(9,260) | $11,337 | $(20,647) | $3,391 | | NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS | $(7,026) | $9,003 | $(15,954) | $2,690 | | Basic EPS | $(0.56) | $0.50 | $(1.25) | $— | | Diluted EPS | $(0.56) | $0.50 | $(1.25) | $— | | Dividends per share | $0.275 | $0.24 | $0.515 | $0.48 | Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the unaudited condensed consolidated statements of comprehensive income (loss), including net income (loss) and other comprehensive income (loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (In Thousands) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(9,260) | $11,337 | $(20,647) | $3,391 | | Other comprehensive income (loss) | $426 | $290 | $857 | $1,722 | | Comprehensive income (loss) | $(8,834) | $11,627 | $(19,790) | $5,113 | | Comprehensive loss attributable to ATN International, Inc. | $(6,600) | $9,293 | $(15,097) | $4,412 | Condensed Consolidated Statements of Equity This section presents the unaudited condensed consolidated statements of equity, detailing changes in common stock, retained earnings, and total equity Condensed Consolidated Statements of Equity (In Thousands) | Equity Component | Balance, March 31, 2025 | Balance, June 30, 2025 | Balance, March 31, 2024 | Balance, June 30, 2024 | | :----------------- | :---------------------- | :--------------------- | :---------------------- | :--------------------- | | Common Stock | $180 | $181 | $173 | $173 | | Treasury Stock | $(103,143) | $(103,183) | $(92,463) | $(102,379) | | Additional Paid-In Capital | $214,362 | $216,856 | $207,551 | $209,944 | | Retained Earnings | $350,728 | $333,231 | $405,031 | $409,043 | | Accumulated Other Comprehensive Income/(Loss) | $11,208 | $11,634 | $9,700 | $9,990 | | Total ATNI Stockholders' Equity | $473,335 | $458,719 | $529,992 | $526,771 | | Noncontrolling Interests | $107,385 | $109,053 | $98,724 | $101,994 | | Total Equity | $580,720 | $567,772 | $628,716 | $628,765 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows, categorizing cash movements from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (In Thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :----------------------------- | :----------------------------- | | Operating Activities | $59,843 | $58,410 | | Investing Activities | $(45,636) | $(46,843) | | Financing Activities | $9,864 | $(481) | | Net change in cash, cash equivalents, and restricted cash | $24,071 | $11,086 | | Total cash, cash equivalents, and restricted cash, end of period | $113,315 | $73,253 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed notes explaining the accounting policies, significant estimates, and specific financial statement line items 1. Organization and Business Operations This note describes ATN International, Inc.'s business as a digital infrastructure and communications provider, its operating segments, and recent operational developments - ATN International, Inc. provides digital infrastructure and communications services in rural/remote US and international markets (Bermuda, Cayman Islands, Guyana, US Virgin Islands)[23][28] - The Company operates two segments: US Telecom (fixed, carrier, managed services in Alaska and western US) and International Telecom (fixed, carrier, mobility, managed services in Bermuda, Cayman Islands, Guyana, US Virgin Islands)[26][28] - Rebranding efforts include GTT in Guyana to 'One Communications' (OneGY) in 2024 and Viya in US Virgin Islands to 'One Communications' (OneVI) in Q2 2025[29] - As of June 30, 2025, $7.8 million of US Telecom telecommunication licenses were reclassified as assets held for sale, with an expected pre-tax gain of approximately $6.0 million upon completion in H2 2025[31] Restructuring and Reorganization Expenses (In Thousands) | Segment | Three months ended June 30, 2025 | Six months ended June 30, 2025 | | :---------------- | :------------------------------- | :----------------------------- | | International Telecom | $1,385 | $2,891 | | US Telecom | $2,357 | $2,491 | | Corporate and Other | $1,165 | $1,355 | | Total | $4,907 | $6,737 | 2. Basis of Presentation This note explains the basis for preparing the unaudited condensed consolidated financial statements, including compliance with SEC rules and GAAP, and recent accounting pronouncements - The financial statements are unaudited, prepared in accordance with SEC rules and GAAP, and include normal recurring adjustments[34] - The Company is assessing the impact of ASU 2023-09 (Enhancements to Income Tax Disclosures), effective for annual periods after December 15, 2024, and ASU 2024-03 (Disaggregation of Income Statements Expenses), effective for annual periods after December 15, 2026[36][37] 3. Revenue Recognition and Receivables This note details the Company's revenue recognition policies, disaggregated revenue, contract assets and liabilities, and allowance for credit losses Total Revenue by Segment and Recognition Timing (In Thousands) | Segment/Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | International Telecom (ASC 606) | $93,304 | $93,889 | $186,332 | $185,483 | | US Telecom (ASC 606) | $73,180 | $75,477 | $144,791 | $156,791 | | Total Revenue (ASC 606) | $166,484 | $169,366 | $331,123 | $342,274 | | Operating lease income | $2,048 | $2,111 | $4,031 | $4,217 | | Government support revenue | $12,768 | $11,804 | $25,440 | $23,585 | | Total Revenue | $181,300 | $183,281 | $360,594 | $370,076 | Contract Assets and Liabilities (In Thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :---------------------- | :------------ | :---------------- | :--------- | :--------- | | Contract asset – current | $3,526 | $3,920 | $(394) | (10.1)% | | Contract asset – noncurrent | $4,701 | $5,368 | $(667) | (12.4)% | | Contract liability – current | $(30,917) | $(28,932) | $(1,985) | 6.9% | | Contract liability – noncurrent | $(51,393) | $(55,116) | $3,723 | (6.8)% | | Net contract liability | $(74,083) | $(74,760) | $677 | (0.9)% | - Remaining performance obligations totaled $580 million at June 30, 2025, with approximately 44% expected to be satisfied within 24 months and $60 million annually from 2027-2032[44] Allowance for Credit Losses Activity (In Thousands) | Item | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $15,132 | $16,362 | | Current period provision for expected losses | $4,135 | $2,855 | | Write-offs charged against the allowance | $(5,326) | $(2,918) | | Recoveries collected | $147 | $133 | | Balance at end of period | $14,088 | $16,432 | 4. Leases This note provides information on the Company's operating and financing leases, including costs, cash flows, and weighted-average terms and discount rates Total Operating and Finance Lease Costs (In Thousands) | Lease Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total operating lease cost | $9,195 | $8,078 | $18,388 | $15,677 | | Total finance lease cost | $2,120 | $1,245 | $4,376 | $2,156 | Weighted-Average Lease Terms and Discount Rates | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Weighted-average remaining lease term (Operating) | 12.0 years | 12.6 years | | Weighted-average remaining lease term (Financing) | 5.8 years | 11.5 years | | Weighted-average discount rate (Operating) | 7.0% | 6.8% | | Weighted-average discount rate (Financing) | 8.5% | 7.4% | - For the six months ended June 30, 2025, the Company recorded $4.0 million in lease income as a lessor, primarily from Carrier Services revenue[59] 5. Use of Estimates This note explains that financial statement preparation involves management estimates and assumptions, which may differ from actual results - Financial statements rely on management estimates and assumptions, particularly for revenue recognition, goodwill, long-lived intangible assets, income taxes, and contingencies[61] - Estimates are based on historical experience and reasonable assumptions, but actual results may differ significantly[61] 6. Fair Value Measurements and Investments This note details fair value measurements for assets and liabilities, categorizing them by input observability, and discusses other investments and debt valuation Assets and Liabilities Measured at Fair Value (In Thousands) | Description | June 30, 2025 (Total) | December 31, 2024 (Total) | | :------------------------------------------ | :-------------------- | :------------------------ | | Short term investments | $395 | $300 | | Employee benefit plan investments | $2,199 | $2,768 | | Interest rate swap | $98 | $(723) | | Warrants on Alaska Communications redeemable common units | $0 | $(249) | | Total assets and liabilities measured at fair value | $2,692 | $2,096 | - The Company holds $41.956 million in investments without a readily determinable fair value as of June 30, 2025, included in other assets[67] - Redeemable common units and warrants are recorded at the higher of historical cost or fair value, with Alloy common units carried at historical cost ($10.0 million at June 30, 2025) exceeding fair value[68] Fair Value vs. Book Value of Debt (In Millions) | Debt Type | June 30, 2025 (Fair Value) | June 30, 2025 (Book Value) | December 31, 2024 (Fair Value) | December 31, 2024 (Book Value) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------------------------- | :----------------------------- | | Long-term debt | $590.4 | $583.4 | $564.4 | $557.4 | | Customer receivable credit facility | $39.9 | $40.2 | $42.7 | $44.2 | 7. Long-Term Debt This note outlines the Company's various long-term debt facilities, including terms, interest rates, covenants, and maturity schedules - The 2023 CoBank Credit Facility includes a $170 million revolving credit facility and a $130 million term loan, with $124.3 million outstanding on the term loan and $76.6 million on the revolving loan as of June 30, 2025[73][78] The Company was in compliance with all financial covenants[78] - The 2024 Alaska Credit Facility provides a $300 million term loan and a $90 million revolving facility, with $300.0 million outstanding on the term loan and $5.0 million on the revolving loan as of June 30, 2025[81][82] The Company is not a guarantor for this debt[91] - The FirstNet Receivables Credit Facility has $40.5 million outstanding as of June 30, 2025, secured by AT&T receivables under the FirstNet Agreement[100] - OneGY entered into 2025 IDB Credit Facilities for a $10.0 million revolving facility and up to $30.0 million term loan, with $5.0 million outstanding on the revolving facility as of June 30, 2025[102][108] - The Sacred Wind Term Debt has $23.2 million outstanding as of June 30, 2025, with fixed interest rates from 0.88% to 5.0%[111] Sacred Wind was in compliance with its corrective action plan for a financial covenant[112] - The OneVI Debt has $60.0 million outstanding as of June 30, 2025, with a fixed interest rate of 4.0% and maturity on July 1, 2026[113][115] The Net Leverage Ratio covenant was amended to 7.0 to 1.0 and the Company was in compliance as of December 31, 2024[116] NCSC issued a commitment letter to extend the maturity to July 1, 2035[116] Annual Maturities of Debt Instruments (In Thousands) | Amounts Maturing During | US Telecom | International Telecom | Corporate and Other | Total Debt | Customer Receivable Credit Facility | | :-------------------------------- | :--------- | :-------------------- | :------------------ | :--------- | :---------------------------------- | | July 1, 2025 through December 31, 2025 | $1,778 | $5,000 | $3,250 | $10,028 | $3,960 | | Year ending December 31, 2026 | $5,469 | $60,000 | $8,125 | $73,594 | $8,409 | | Year ending December 31, 2027 | $13,098 | $— | $9,750 | $22,848 | $8,807 | | Year ending December 31, 2028 | $18,858 | $— | $86,370 | $105,228 | $9,229 | | Year ending December 31, 2029 | $282,749 | $— | $93,438 | $376,187 | $6,041 | | Thereafter | $6,239 | $— | $— | $6,239 | $4,085 | | Total | $328,191 | $65,000 | $200,933 | $594,124 | $40,531 | | Debt Discounts | $(7,719) | $(100) | $(2,906) | $(10,725) | $(309) | | Book Value as of June 30, 2025 | $320,472 | $64,900 | $198,027 | $583,399 | $40,222 | 8. Government Support and Spectrum Matters This note details the Company's participation in government funding programs, including USF, construction grants, and the Replace and Remove Program, outlining funding and obligations - The Company receives federal USF support, including $25.6 million annually from the Alaska Connect Fund (ACF) until 2028, approximately $105 million over 14 years from Enhanced Alternative Connect America Model (E-ACAM), and $8.0 million annually from Connect America Fund II (CAF II) in the rural southwest until July 2028[119] - The Company was awarded $2.3 million annually from the Rural Digital Opportunity Fund Phase I (RDOF) auction through 2031, but transferred $1.3 million and returned $0.7 million of these awards by June 2025, incurring a $1.9 million loss related to RDOF transfers[119][121] Communication Services Revenue from Government Programs (In Thousands) | Program | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | High cost support | $4,471 | $4,876 | $8,899 | $9,723 | | CAF II (including ACF) | $8,227 | $6,784 | $16,397 | $13,571 | | RDOF | $69 | $145 | $144 | $290 | | ECF | $— | $498 | $— | $7,312 | | RHC | $4,353 | $3,682 | $8,715 | $7,119 | | Other | $1,571 | $1,862 | $3,212 | $8,877 | | Total | $18,691 | $17,847 | $37,367 | $46,892 | - The Company was awarded $103.8 million in construction grants as of June 30, 2025, after new grants of $15.8 million and rescinded grants of $52.5 million (including $51 million from NTIA's BEAD Program)[127][128] - As a sub-recipient, the Company is involved in tribal government grants (TBCP, ReConnect) totaling $239 million as of June 30, 2025, having received $23.5 million in funding and spent $25.4 million on construction[129] - The Replace and Remove Program allocation increased to approximately $517 million (from $207 million) in December 2024, with a project completion deadline extended to Q2 2026[131] Replace and Remove Program Expenditures and Reimbursements (In Thousands) | Item | Capital (June 30, 2025) | Operating (June 30, 2025) | Total (June 30, 2025) | Capital (June 30, 2024) | Operating (June 30, 2024) | Total (June 30, 2024) | | :-------------------------- | :---------------------- | :------------------------ | :-------------------- | :---------------------- | :------------------------ | :-------------------- | | Total spend | $167,827 | $32,657 | $200,484 | $87,388 | $24,654 | $112,042 | | Total reimbursements | $(135,480) | $(32,267) | $(167,747) | $(54,194) | $(15,075) | $(69,269) | | Amount pending reimbursement | $32,347 | $390 | $32,737 | $33,194 | $9,579 | $42,773 | 9. Retirement Plans This note describes the Company's multi-employer and noncontributory defined benefit pension and postretirement plans, including net periodic benefit costs - The Company participates in the Alaska Electrical Pension Fund (AEPF), a multi-employer defined benefit plan, which was not in endangered or critical status[133] - The Company also has noncontributory defined benefit pension and postretirement plans, with most benefits frozen and no new participants allowed[134] Net Periodic Pension and Postretirement Benefit Costs (In Thousands) | Benefit Type | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net periodic pension expense (benefit) | $22 | $106 | $44 | $214 | | Net periodic postretirement expense (benefit) | $54 | $33 | $109 | $67 | 10. Income Taxes This note details the Company's effective tax rates, income tax expenses/benefits, and key factors influencing these rates, such as valuation allowances and discrete items Income Tax Rates and Impact (In Millions) | Period | Pretax Income (Loss) | Income Tax Expense (Benefit) | Effective Tax Rate | | :------------------------------- | :------------------- | :--------------------------- | :----------------- | | Three months ended June 30, 2025 | $(13.0) | $(3.8) | 29.0% | | Three months ended June 30, 2024 | $11.5 | $0.2 | 1.8% | | Six months ended June 30, 2025 | $(24.6) | $(4.0) | 16.1% | | Six months ended June 30, 2024 | $5.2 | $1.8 | 35.0% | - For Q2 2025, the effective tax rate was impacted by a $4.9 million benefit from reversing an unrecognized tax position, a $0.6 million expense for interest on uncertain tax positions, and a $1.0 million benefit from releasing a capital loss carryover valuation allowance[138][140] - For Q2 2024, the effective tax rate was impacted by a $2.4 million expense from a foreign land sale gain, a $3.7 million benefit from reversing an unrecognized tax position, and a $0.8 million expense for interest on unrecognized tax positions[141] 11. Earnings Per Share and Redeemable Noncontrolling Interests This note reconciles basic and diluted earnings per share and explains the accounting for redeemable noncontrolling interests, including their allocation of net income/loss Earnings Per Share Reconciliation (In Thousands, Except Per Share Data) | Metric | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to ATN International, Inc. stockholders- Basic | $(7,026) | $9,003 | $(15,954) | $2,690 | | Less: Preferred dividends | $(1,507) | $(1,376) | $(2,965) | $(2,727) | | Net loss attributable to ATN International, Inc. common stockholders- Diluted | $(8,533) | $7,627 | $(18,919) | $(37) | | Weighted-average shares outstanding- Basic | 15,223 | 15,254 | 15,177 | 15,346 | | Weighted-average shares outstanding- Diluted | 15,223 | 15,255 | 15,177 | 15,346 | - The Company allocated losses of $5.1 million and $2.7 million to redeemable common units for the three months ended June 30, 2025 and 2024, respectively, and $8.7 million and $6.2 million for the six months ended June 30, 2025 and 2024, respectively[151] Roll Forward of Redeemable Noncontrolling Interests (In Thousands) | Item | Redeemable Preferred Units (June 30, 2025) | Redeemable Common Units (June 30, 2025) | Total Redeemable Noncontrolling Interests (June 30, 2025) | | :-------------------- | :----------------------------------------- | :---------------------------------------- | :-------------------------------------------------------- | | Balance, Dec 31, 2024 | $65,704 | $10,599 | $76,303 | | Accrued preferred dividend | $2,965 | $— | $2,965 | | Allocated net loss | $— | $(8,746) | $(8,746) | | Change in fair value | $— | $8,193 | $8,193 | | Balance, June 30, 2025 | $68,669 | $10,046 | $78,715 | 12. Segment Reporting This note provides detailed financial information for the International Telecom and US Telecom segments, including revenue, operating income, and capital expenditures Segment Revenue and Operating Income (Three Months Ended June 30, 2025, In Thousands) | Segment | Total Revenue | Income (loss) from operations | | :---------------- | :------------ | :---------------------------- | | International Telecom | $94,894 | $16,221 | | US Telecom | $86,406 | $(5,533) | | Corporate and Other | $— | $(10,455) | | Consolidated | $181,300 | $233 | Segment Revenue and Operating Income (Six Months Ended June 30, 2025, In Thousands) | Segment | Total Revenue | Income (loss) from operations | | :---------------- | :------------ | :---------------------------- | | International Telecom | $189,390 | $30,970 | | US Telecom | $171,204 | $(7,948) | | Corporate and Other | $— | $(20,122) | | Consolidated | $360,594 | $2,900 | Selected Segment Balance Sheet Data (June 30, 2025, In Thousands) | Segment | Cash, cash equivalents, and restricted cash | Total assets | Total debt, including current portion | | :---------------- | :------------------------------------------ | :----------- | :------------------------------------ | | International Telecom | $66,726 | $701,302 | $64,900 | | US Telecom | $44,866 | $914,121 | $320,472 | | Corporate and Other | $1,723 | $91,583 | $198,027 | | Consolidated | $113,315 | $1,707,006 | $583,399 | Capital Expenditures by Segment (Six Months Ended June 30, In Thousands) | Segment | 2025 Capital Expenditures | 2024 Capital Expenditures | | :---------------- | :------------------------ | :------------------------ | | International Telecom | $20,270 | $28,951 | | US Telecom | $67,650 | $77,498 | | Corporate and Other | $2 | $1,579 | | Consolidated | $87,922 | $108,028 | 13. Commitments and Contingencies This note outlines the Company's involvement in regulatory and litigation matters, including spectrum fee disputes, international bypass allegations, tax claims, and an FCC settlement - OneGY is engaged in ongoing disputes with the Telecommunications Authority (TA) in Guyana regarding spectrum fee calculation methodology since 2006[169] - OneGY has filed lawsuits against Digicel for alleged international bypass in violation of exclusive license rights, with cases pending in the Court of Appeals in Guyana[170] - OneGY is involved in tax claims with the Guyana Revenue Authority (GRA) dating back to 1991, primarily concerning the deductibility of intercompany advisory fees[171] - Alaska Communications settled with the FCC Enforcement Bureau for $6.3 million (a $5.3 million cash payment and $1.0 million receivable forgiveness) regarding the Rural Health Care Support Program, and entered a three-year compliance agreement[172] - The Company has accrued $15.3 million as of June 30, 2025, for probable adverse outcomes in these and other legal/regulatory matters[173] 14. Subsequent Events This note discloses the signing of the One Big Beautiful Bill Act and the Company's assessment of its non-material financial impact for FY2025 - The One Big Beautiful Bill Act was signed into law on July 4, 2025[174] The Company is evaluating its impact but does not anticipate material financial statement impacts for FY2025[174] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, analyzing revenue, expenses, and segment performance Overview This section provides an overview of ATN International's business, operating segments, key agreements (FirstNet, Verizon CMS), and participation in government support programs - ATN International is a leading provider of digital infrastructure and communications services, focusing on rural and remote markets in the US and internationally (Bermuda, Cayman Islands, Guyana, US Virgin Islands)[176][179][181] - The Company operates two segments: US Telecom (fixed, carrier, managed services in Alaska and western US) and International Telecom (fixed, carrier, mobility, managed services in international markets)[179] - The FirstNet Agreement involves building AT&T's network in the western US, with $77 million in construction revenue recorded through June 30, 2025, and an expected $6 million more by the end of 2025[183] - The Verizon CMS Agreement involves upgrading wireless service and providing network, infrastructure, and technical services to Verizon in the southwestern US, with an initial term ending in 2030[185][187] - The Company receives various USF high-cost support, including $25.6 million annually from ACF (Alaska Connect Fund) until 2028, approximately $105 million over 14 years from E-ACAM, and $8 million annually from CAF II until July 2028[192] - As of June 30, 2025, the Company was awarded $103.8 million in construction grants and is a sub-recipient of tribal government grants totaling $239 million[194][196] - The Replace and Remove Program allocation increased to approximately $517 million, with $200.5 million incurred in expenditures by June 30, 2025, and $37.0 million in reimbursements received during the six months ended June 30, 2025[197][198][199] Selected Segment Financial Information This section presents selected financial data for the International Telecom and US Telecom segments, including total revenue and income (loss) from operations Selected Segment Financial Information (Three Months Ended June 30, 2025, In Thousands) | Segment | Total Revenue | Income (loss) from operations | | :---------------- | :------------ | :---------------------------- | | International Telecom | $94,894 | $16,221 | | US Telecom | $86,406 | $(5,533) | | Corporate and Other | $— | $(10,455) | | Consolidated | $181,300 | $233 | Selected Segment Financial Information (Three Months Ended June 30, 2024, In Thousands) | Segment | Total Revenue | Income (loss) from operations | | :---------------- | :------------ | :---------------------------- | | International Telecom | $95,357 | $32,405 | | US Telecom | $87,924 | $884 | | Corporate and Other | $— | $(8,973) | | Consolidated | $183,281 | $24,316 | Comparison of Segment Results (Three Months) This section analyzes the changes in revenue and operating income/loss for the International Telecom and US Telecom segments for the three months ended June 30 - International Telecom revenue decreased by $0.5 million (0.5%) to $94.9 million, primarily due to declines in Mobility, Fixed, and Carrier Services, partially offset by ancillary services[207] - International Telecom operating expenses increased by $15.7 million (24.9%) to $78.7 million, largely due to a $15.8 million gain on asset disposition in the prior year and $1.4 million in restructuring expenses in the current period[208] - International Telecom operating income decreased by $16.2 million (50.0%) to $16.2 million[209] - US Telecom revenue decreased by $1.5 million (1.7%) to $86.4 million, mainly due to a $1.1 million reduction in Fixed revenues (impacted by ECF and ACP conclusion), $0.3 million in Carrier Services, and $0.8 million in Mobility, partially offset by a $1.4 million increase in construction revenue[210] - US Telecom operating expenses increased by $4.9 million (5.6%) to $91.9 million, driven by $2.4 million in restructuring expenses and a $2.6 million increase in loss on asset disposition[211] - US Telecom operating income shifted to a loss of $5.5 million from an income of $0.9 million[212] Comparison of Consolidated Results (Three Months) This section provides a consolidated comparison of key financial metrics, including revenue, operating expenses, and net income (loss), for the three months ended June 30 Consolidated Results (Three Months Ended June 30, In Thousands) | Metric | 2025 | 2024 | Amount of Increase (Decrease) | Percent Increase (Decrease) | | :------------------------------------------ | :----- | :----- | :---------------------------- | :-------------------------- | | Communication services revenue | $174,874 | $177,365 | $(2,491) | (1.4)% | | Construction revenue | $2,216 | $820 | $1,396 | 170.2% | | Other revenue | $4,210 | $5,096 | $(886) | (17.4)% | | Total revenue | $181,300 | $183,281 | $(1,981) | (1.1)% | | Total operating expenses | $181,067 | $158,965 | $22,102 | 13.9% | | Income from operations | $233 | $24,316 | $(24,083) | (99.0)% | | Income (loss) before income taxes | $(13,036) | $11,541 | $(24,577) | (213.0)% | | NET INCOME (LOSS) | $(9,260) | $11,337 | $(20,597) | (181.7)% | | NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS | $(7,026) | $9,003 | $(16,029) | (178.0)% | Communications Services Revenue This section details changes in Mobility, Fixed, Carrier Services, and Other Communications Services revenue for the three months ended June 30, by segment - Mobility revenue decreased by $1.3 million (4.7%) to $26.3 million for Q2 2025, driven by a $0.5 million decrease in International Telecom (business and consumer) and a $0.8 million decrease in US Telecom due to the conclusion of retail mobility services[216][219] - Fixed revenue decreased by $1.6 million (1.4%) to $113.1 million for Q2 2025, primarily due to a $0.5 million decrease in International Telecom and a $1.1 million decrease in US Telecom, impacted by the conclusion of ECF and ACP programs[219][220] - Carrier Services revenue decreased by $0.5 million (1.5%) to $33.2 million for Q2 2025, with a $0.2 million decrease in International Telecom (roaming) and a $0.3 million decrease in US Telecom (transition to carrier service management contracts)[225][228] - Other Communications Services revenue increased by $0.8 million (57.1%) to $2.2 million for Q2 2025, due to increased ancillary services in International Telecom, partially offset by reduced non-recurring project revenue in US Telecom[226] Construction Revenue This section discusses the increase in construction revenue, primarily driven by completed FirstNet cell sites, for the three months ended June 30 - Construction revenue increased to $2.2 million for Q2 2025 from $0.8 million for Q2 2024, a 170.2% increase, primarily due to an increase in completed FirstNet cell sites[214][229] The build is expected to be substantially complete by the end of 2025[229] Other Revenue This section details the decrease in Managed Services revenue for the three months ended June 30, across both International and US Telecom segments - Managed Services revenue decreased by $0.9 million (17.6%) to $4.2 million for Q2 2025, with decreases of $0.4 million in International Telecom and $0.5 million in US Telecom[230][231] Operating Expenses This section analyzes changes in cost of communication services, construction revenue, SG&A, restructuring, depreciation, and asset disposition for the three months ended June 30 - Cost of communication services and other increased by $1.1 million (1.45%) to $77.2 million for Q2 2025[233] International Telecom remained consistent, while US Telecom increased by $1.1 million due to cell site rents, partially offset by cost savings and ECF program conclusion[233] - Cost of construction revenue increased to $2.2 million for Q2 2025 from $0.8 million for Q2 2024, a 168.5% increase, due to more completed FirstNet sites[214][236] - Selling, general and administrative expenses decreased by $1.5 million (2.6%) to $56.2 million for Q2 2025, driven by cost containment initiatives across all segments (International Telecom: $0.4M decrease, US Telecom: $0.3M decrease, Corporate Overhead: $0.8M decrease)[238][242] - Restructuring and reorganization expenses totaled $4.9 million for Q2 2025 (International Telecom: $1.4M, US Telecom: $2.4M, Corporate and Other: $1.2M), with no such expenses in Q2 2024[214][245][246] - Depreciation and amortization expenses decreased by $1.7 million (4.8%) to $33.9 million for Q2 2025, due to reduced capital expenditures and fully depreciated assets in International Telecom ($1.1M decrease) and US Telecom ($1.4M decrease)[214][247][250] - Loss on disposition of assets and transfers was $2.7 million for Q2 2025 (International Telecom: $0.1M, US Telecom: $2.6M), compared to a $15.9 million gain in Q2 2024 (primarily from real estate sale in International Telecom)[214][249][251] Other Income (Expense) This section discusses changes in interest expense and other expenses, including foreign currency transaction losses, for the three months ended June 30 - Interest expense increased by $0.5 million (3.8%) to $12.8 million for Q2 2025, due to increased borrowings under credit facilities[214][254] - Other expense was $0.6 million for Q2 2025, primarily from foreign currency transaction losses[255] Income Taxes This section details the effective tax rates and income tax expenses/benefits for the three months ended June 30, highlighting influencing factors - The effective tax rate for Q2 2025 was 29.0% (benefit of $3.8 million on a pretax loss of $13.0 million), compared to 1.8% for Q2 2024 (expense of $0.2 million on a pretax income of $11.5 million)[255][256][257] Net (income) loss attributable to noncontrolling interests, net of tax This section explains the allocation of net income or loss to noncontrolling interests for the three months ended June 30, by segment - Net loss attributable to noncontrolling interests was an allocation of $2.2 million in losses for Q2 2025, compared to $2.3 million in income for Q2 2024[260] - International Telecom's net income attributable to noncontrolling interests decreased by $2.8 million to an allocation of $2.3 million of income, largely due to the $15.9 million gain on asset disposition in Q2 2024[262] - US Telecom's net loss attributable to noncontrolling interests increased by $1.7 million to an allocation of $4.5 million in losses, due to increased losses at less than wholly owned subsidiaries[262] Net income (loss) attributable to ATN International, Inc. stockholders This section presents the net income (loss) attributable to ATN International, Inc. stockholders and diluted EPS for the three months ended June 30 - Net loss attributable to ATN International, Inc. stockholders was $7.0 million for Q2 2025, compared to income of $9.0 million for Q2 2024[260] - Diluted EPS was a loss of $0.56 for Q2 2025, compared to income of $0.50 for Q2 2024, negatively impacted by preferred dividends of $1.5 million and $1.4 million, respectively[261] Comparison of Segment Results (Six Months) This section analyzes the changes in revenue and operating income/loss for the International Telecom and US Telecom segments for the six months ended June 30 - International Telecom revenue increased by $1.0 million (0.5%) to $189.4 million, driven by ancillary services, partially offset by reductions in Mobility and Fixed revenue[266] - International Telecom operating expenses increased by $14.1 million (9.8%) to $158.4 million, influenced by a $15.8 million gain on asset disposition in the prior year and a $1.7 million increase in restructuring expenses[267] - International Telecom operating income decreased by $13.2 million (29.9%) to $31.0 million[268] - US Telecom revenue decreased by $10.5 million (5.8%) to $171.2 million, primarily due to a $7.4 million reduction in Fixed revenues (ECF and ACP conclusion), $1.6 million in Mobility, and $1.1 million in Carrier Services, partially offset by a $0.9 million increase in construction revenue[269] - US Telecom operating expenses decreased by $1.0 million (0.6%) to $179.2 million, due to reduced direct costs of services and cost savings initiatives[270] - US Telecom operating income shifted to a loss of $7.9 million from an income of $1.5 million[271] Comparison of Consolidated Results (Six Months) This section provides a consolidated comparison of key financial metrics, including revenue, operating expenses, and net income (loss), for the six months ended June 30 Consolidated Results (Six Months Ended June 30, In Thousands) | Metric | 2025 | 2024 | Amount of Increase (Decrease) | Percent Increase (Decrease) | | :------------------------------------------ | :----- | :----- | :---------------------------- | :-------------------------- | | Communication services revenue | $348,905 | $358,633 | $(9,728) | (2.7)% | | Construction revenue | $3,262 | $2,406 | $856 | 35.6% | | Other revenue | $8,427 | $9,037 | $(610) | (6.8)% | | Total revenue | $360,594 | $370,076 | $(9,482) | (2.6)% | | Total operating expenses | $357,694 | $341,186 | $16,508 | 4.8% | | Income from operations | $2,900 | $28,890 | $(25,990) | (90.0)% | | Income (loss) before income taxes | $(24,614) | $5,213 | $(29,827) | (572.2)% | | NET INCOME (LOSS) | $(20,647) | $3,391 | $(24,038) | (708.9)% | | NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS | $(15,954) | $2,690 | $(18,644) | (693.1)% | Communications Services Revenue This section details changes in Mobility, Fixed, Carrier Services, and Other Communications Services revenue for the six months ended June 30, by segment - Mobility revenue decreased by $2.1 million (3.9%) to $52.4 million for H1 2025, due to a $0.4 million decrease in International Telecom (consumer equipment sales) and a $1.6 million decrease in US Telecom (conclusion of retail mobility services)[274][276] - Fixed revenue decreased by $7.8 million (3.3%) to $226.1 million for H1 2025, primarily due to a $0.4 million decrease in International Telecom (business customers) and a $7.4 million decrease in US Telecom (conclusion of ECF and ACP programs)[277][281] - Carrier Services revenue decreased by $0.9 million (1.3%) to $66.4 million for H1 2025, with a $0.1 million increase in International Telecom (roaming) offset by a $1.1 million decrease in US Telecom (transition to carrier service management contracts)[277][281] - Other Communications Services revenue increased by $1.1 million (37.9%) to $4.0 million for H1 2025, due to increased project-related and ancillary services in International Telecom, partially offset by reduced non-recurring project revenue in US Telecom[278] Construction Revenue This section discusses the increase in construction revenue, primarily driven by completed FirstNet cell sites, for the six months ended June 30 - Construction revenue increased to $3.3 million for H1 2025 from $2.4 million for H1 2024, a 35.6% increase, primarily due to an increase in completed FirstNet cell sites[273][279](index=279&type=chunk] The build is expected to be substantially complete by the end of 2025[279] Other Revenue This section details the decrease in Managed Services revenue for the six months ended June 30, across both International and US Telecom segments - Managed Services revenue decreased by $0.6 million (6.7%) to $8.4 million for H1 2025, with decreases of $0.2 million in International Telecom and $0.4 million in US Telecom[280] Operating Expenses This section analyzes changes in cost of communication services, construction revenue, SG&A, restructuring, depreciation, and asset disposition for the six months ended June 30 - Cost of communication services and other decreased by $1.1 million (0.7%) to $155.4 million for H1 2025[273][284](index=284&type=chunk] International Telecom increased by $0.7 million (transport, doubtful accounts, maintenance), while US Telecom decreased by $2.0 million (cost savings, ECF program conclusion)[284] - Cost of construction revenue increased to $3.7 million for H1 2025 from $2.4 million for H1 2024, a 54.7% increase, due to more completed FirstNet sites[273][285] - Selling, general and administrative expenses decreased by $7.6 million (6.4%) to $111.4 million for H1 2025, due to cost containment initiatives across all segments (International Telecom: $2.9M decrease, US Telecom: $2.8M decrease, Corporate Overhead: $1.8M decrease)[273][286][289] - Transaction-related charges increased significantly to $1.6 million for H1 2025 from a nominal amount in H1 2024[273][290] - Restructuring and reorganization expenses totaled $6.7 million for H1 2025 (International Telecom: $2.9M, US Telecom: $2.5M, Corporate and Other: $1.4M), compared to $1.2 million in H1 2024 (International Telecom)[273][291][292] - Depreciation and amortization expenses decreased by $1.5 million (2.2%) to $68.4 million for H1 2025, due to reduced capital expenditures and fully depreciated assets in International Telecom ($1.9M decrease) and US Telecom ($1.3M decrease)[273][292][296] - Loss on disposition of assets and transfers was $3.4 million for H1 2025 (International Telecom: $0.4M, US Telecom: $3.0M), compared to a $16.4 million gain in H1 2024 (primarily from real estate sale in International Telecom and renewable energy assets)[273][294][295] Other Income (Expense) This section discusses changes in interest income, interest expense, and other expenses, including foreign currency transaction losses, for the six months ended June 30 - Interest income decreased by $0.2 million (31.1%) to $0.4 million for H1 2025[273][295] - Interest expense increased by $0.9 million (3.8%) to $24.8 million for H1 2025, due to increased borrowings[273][298] - Other expense increased significantly to $3.2 million for H1 2025, primarily due to a non-operating employee-related matter and $1.0 million in foreign currency transaction losses[273][298] Income Taxes This section details the effective tax rates and income tax expenses/benefits for the six months ended June 30, highlighting influencing factors - The effective tax rate for H1 2025 was 16.1% (benefit of $4.0 million on a pretax loss of $24.6 million), compared to 35.0% for H1 2024 (expense of $1.8 million on a pretax income of $5.2 million)[299][300][301] Net (income) loss attributable to noncontrolling interests, net of tax This section explains the allocation of net income or loss to noncontrolling interests for the six months ended June 30, by segment - Net loss attributable to noncontrolling interests was an allocation of $4.7 million in losses for H1 2025, compared to $0.7 million in income for H1 2024[273][303] - International Telecom's net income attributable to noncontrolling interests decreased by $2.8 million to an allocation of $3.8 million of income, largely due to the $15.9 million gain on asset disposition in H1 2024[303] - US Telecom's net loss attributable to noncontrolling interests increased by $2.6 million to an allocation of $8.5 million in losses, due to increased losses at less than wholly owned subsidiaries[304] Net loss attributable to ATN International, Inc. stockholders This section presents the net loss attributable to ATN International, Inc. stockholders and diluted EPS for the six months ended June 30 - Net loss attributable to ATN International, Inc. stockholders was $16.0 million for H1 2025, compared to $2.7 million for H1 2024[304] - Diluted EPS was a loss of $1.25 for H1 2025, compared to break-even for