Altice USA(ATUS) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2024 was $2.2 billion, a decline of 3.6% year-over-year, an improvement from the previous year's decline of 5.6% [27] - Adjusted EBITDA was$ 867 million, down 5.9% year-over-year, but improved from a decline of 8.5% in Q2 2023 [31] - Residential revenue decreased by 4.4% year-over-year, driven by a smaller customer base and video subscriber losses, but this was an improvement from a 5.7% decline in Q2 2023 [27][30] - Free cash flow was negative $41 million, impacted by higher cash taxes, but positive free cash flow is targeted for the full year [33] Business Line Data and Key Metrics Changes - Residential mobile service revenue grew over 50% year-over-year for the third consecutive quarter, contributing positively to residential revenue trends [28] - Business services revenue grew by 1.3%, driven by Lightpath enterprise business growth [29] - News and advertising revenue declined by 7.2%, primarily due to non-recurring prior year items, but political revenue is expected to be a tailwind in the second half [29] Market Data and Key Metrics Changes - The broadband customer base remains healthy at 4.4 million, with growth in fiber subscribers and mobile lines [10] - Fiber customer penetration increased to over 15%, with 40,000 fiber customers added in the quarter [33] - Mobile line net additions were 33,000, more than double the pace of the previous year [34] Company Strategy and Development Direction - The company is focused on transforming operations and enhancing customer experience through AI and data analytics [6][8] - A hyper-local go-to-market strategy is being implemented to stabilize subscriber trends and improve competitive positioning [15] - New value-added services, such as Total Care for premium support, are being introduced to enhance customer experience and drive additional revenue [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged competitive and macro pressures, including higher interest rates and inflation, but expressed confidence in the company's ability to achieve long-term growth [7][28] - The focus remains on improving customer satisfaction, with significant increases in NPS scores over the past two years [10] - Management anticipates a stabilization of broadband subscriber trends and expects to see improvements in the second half of the year [36] Other Important Information - The company has upgraded over 700,000 HFC customers to higher speeds, resulting in improved customer satisfaction and reduced churn [12] - Cash capital expenditures were$ 348 million, down 27% year-over-year, with a focus on capital efficiency [38] - The company is well-positioned with a clear runway of debt maturities until 2027, with a leverage ratio of 7.2 times annualized adjusted EBITDA [41] Q&A Session Summary Question: Current run rate savings from truck rolls and call center inbounds - Management reported 1.7 million fewer calls and 235,000 fewer truck rolls, leading to operational savings and improved customer experience [44][45] Question: Outlook for EBITDA and strategic value of legacy Optimum - Management expects year-over-year EBITDA declines to moderate, driven by operational improvements and investments in customer experience [50][51] Question: Impact of ACP on broadband performance - The company experienced a slowdown in gross adds and disconnects in the low-income segment due to the ACP sunset, but is managing these customers effectively [54][56] Question: Green shoots in broadband retention and net adds - Management noted improvements in churn and subscriber stabilization, particularly in fiber and mobile segments [60][61] Question: Migration rate on the fiber side - The company achieved a 60% migration rate and plans to accelerate migrations in the second half of the year [67] Question: Advertising revenue expectations - Management expressed optimism for the second half of the year, particularly regarding political advertising revenue [69]