Cable One(US:CABO)2019-11-09 11:44Financial Data and Key Metrics Changes - Total revenues for Q3 2019 were $285 million, a 6.2% increase from $268.3 million in Q3 2018 [14] - Adjusted EBITDA was $140 million, up 14.1% from $122.7 million in the prior year quarter, with adjusted EBITDA margins increasing 340 basis points to 49.1% [16] - Net income for the quarter was $49.8 million, with a fully diluted net income per share of $8.68 [15] - Operating expenses were $94.9 million, representing 33.3% of revenues, an improvement from 34.3% in the prior year [15] - Capital expenditures totaled $55.8 million, down from $68.3 million in Q3 2018 [16] Business Line Data and Key Metrics Changes - Residential high-speed data (HSD) revenues increased by 8.2%, driven by a 3.5% increase in residential HSD units and a 4.7% rise in residential HSD ARPU [6] - Business services revenue surged by 28% year-over-year, or 10.3% excluding Clearwave operations [14] Market Data and Key Metrics Changes - The company reported a 73% positive consumer sentiment regarding the rebranding to Sparklight, indicating strong market acceptance [10] Company Strategy and Development Direction - The company is focused on integrating the recently acquired Fidelity operations, with an integration timeline of approximately three years [52] - The strategy includes aligning Fidelity's revenues, ARPUs, and margins with those of legacy Cable One [52] - The company plans to realize approximately $15 million in estimated run rate cost synergies from the Fidelity acquisition over the next three years [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued margin expansion and strong performance, despite challenges in customer acquisition comparisons due to prior marketing spend [29] - The management team is optimistic about the integration of Fidelity and the potential for future acquisitions, emphasizing the importance of maintaining a flexible balance sheet [39][44] Other Important Information - The company paid $12.8 million in dividends to shareholders during the quarter [17] - As of September 30, the company had approximately $146 million in cash and a debt balance of about $1.3 billion, with a net debt to adjusted EBITDA leverage ratio of 2.1 times [17][21] Q&A Session Summary Question: Rebranding costs and impact on subscriber numbers - Management confirmed that the $3 million spent on rebranding was incremental to the typical marketing run rate and is expected to be completed in early 2020 [23][24] Question: ARPU trajectory with NewWave usage-based billing - Management indicated that the rollout of usage-based billing would start showing results in Q4, with expectations for ARPU to align more closely with Cable One's [31] Question: Future acquisition plans and cash usage - Management stated they are always looking for acquisition opportunities and emphasized the importance of maintaining a flexible balance sheet for potential future deals [38][39] Question: Customer growth rates from Fidelity - Management did not provide specific customer growth rates for Fidelity but reiterated the focus on integration and aligning operations [52] Question: Synergies from NewWave programming and Fidelity - Management mentioned that synergies from NewWave programming were in line with expectations and that Fidelity synergies would be realized over three years, with some immediate savings already identified [53][54]