solidated munications (US:CNSL)2022-03-03 18:48Financial Data and Key Metrics Changes - Operating revenue for Q4 2021 totaled $318.5 million, down 2.3% year-over-year [18] - Adjusted EBITDA was $126.2 million, resulting in a 39.6% adjusted EBITDA margin for the quarter [18] - Capital expenditures for Q4 were $176.3 million, totaling $515.8 million for the year [18][19] - Net debt leverage was 3.78 times as of December 31, slightly up from the end of Q3 [26] Business Line Data and Key Metrics Changes - Consumer channel revenue was $121.9 million, down 2.7% year-over-year, with broadband growth contributing to a 1.1% increase in consumer broadband revenue [20][21] - Commercial and carrier revenue totaled $143.3 million, down 4.3%, with data and transport revenue at $90.1 million, down 2.9% year-over-year [22][23] - Fiber net additions reached 4,500 in Q4, with a total of 15,500 fiber net additions in the first year of the build plan [7][11] Market Data and Key Metrics Changes - The company upgraded 330,700 fiber passings in 2021, doubling fiber coverage to 22% of addressable markets [11] - The fiber build plan aims to upgrade 1.6 million locations, or 70% of the total footprint, by 2025 [11][32] - The company is positioned to capitalize on government programs and broadband infrastructure grants, recently receiving $18.3 million for fiber expansion in Maine [12] Company Strategy and Development Direction - The company is focused on a fiber-first strategy, with a five-year plan to expand fiber services and improve customer experience [4][32] - The launch of the Fidium fiber brand aims to simplify broadband offerings and enhance customer acquisition [6][32] - The strategy includes leveraging unique fiber assets for commercial and carrier data transport growth, targeting long-term relationships with businesses [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth plan and the potential for significant returns in markets with limited competition [20] - The company anticipates 2022 to be a pivotal year for EBITDA growth, with expectations of net positive fiber net adds [30][52] - Management highlighted the importance of executing the fiber expansion plan and maintaining a disciplined capital allocation strategy [34] Other Important Information - The company announced the sale of its Kansas City assets, expected to close in the second half of 2022, with estimated net proceeds of approximately $90 million [27][28] - The Kansas City market is considered highly competitive, and the divestiture aligns with the company's capital allocation plan [28] - The company ended the year with over $460 million in liquidity, providing flexibility for its build plan [27] Q&A Session Summary Question: Update on government funding and margin trajectory - Management is assessing opportunities for government funding and believes Q1 2022 will likely be the low point for EBITDA margins [37][39] Question: Full-year EBITDA contribution from Kansas City assets - The Kansas City assets are expected to contribute between $3 to $4 million for Q4, with annualizing that figure for full-year impact [41][42] Question: Labor costs and leverage expectations - Management indicated that 2022 is expected to be the high point for leverage, with confidence in EBITDA growth and margin expansion [49][52] Question: Liquidity profile and cash flow expectations - Management expressed confidence in the liquidity position and the ability to execute the growth plan despite potential working capital uses [57][60] Question: Stranded costs from divested assets - There may be some stranded costs associated with the divestitures, but management is focused on managing these costs over time [61]