WOW(US:WOW)2022-11-05 07:49Financial Data and Key Metrics Changes - Total revenue for Q3 2022 decreased by 5.6% to $173.7 million, primarily due to a 1% decline in high-speed data revenue and a 14.2% and 9.9% decline in Video and Telephony revenue respectively [11][25] - Pro forma adjusted EBITDA increased by nearly 3% to $68.5 million, with an adjusted EBITDA margin of 39.4% for the quarter [12][26] - The company ended the quarter with total cash of $45.3 million and total outstanding debt of $746.1 million, maintaining a pro forma leverage ratio of 2.6x [29] Business Line Data and Key Metrics Changes - High-speed data revenue saw a slight decline, but adjusted for a one-time deferred revenue of $2.9 million from the previous year, it would have shown a 1.9% year-over-year increase [11][26] - Video and Telephony revenues declined by 14% and 10% respectively compared to the same period last year [11] - High-speed data average revenue per user (ARPU) remained stable at $65.80, with expectations for future increases as customers upgrade to higher speed tiers [15][54] Market Data and Key Metrics Changes - The company added 1,400 high-speed data RGUs, bringing the total to approximately 519,000, with a low churn rate contributing to subscriber growth [13] - The Edge-Out strategy showed strong penetration rates, with the 2021 vintage reaching 45% and the 2022 vintage maintaining a double-digit penetration rate [16] Company Strategy and Development Direction - The company announced a share repurchase authorization of up to $50 million over the next 18 months, emphasizing that this will not materially affect its leverage profile [10] - The focus remains on enhancing infrastructure and expanding into new markets, including fiber Edge-Out initiatives in Alabama and Florida [18][52] - The company is committed to maintaining a broadband-first strategy while managing costs effectively, with a target of $35.5 million in cost reductions over the next few years [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by high inflation and rising interest rates, which have cooled the housing market and reduced the number of potential movers [20] - Despite lowering expectations for net adds in the fourth quarter, management remains confident in the company's growth strategy and ability to compete effectively [19][35] - The outlook for full-year high-speed data revenue has been adjusted to between $411 million and $414 million, with total revenue expected to be between $702 million and $705 million [34] Other Important Information - The company reported a trailing 12-month savings of $19.8 million from cost structure alignment efforts following the divestiture of five service areas [28] - The mobile partnership with Reach Mobile has been successfully deployed across all markets, contributing to the company's growth strategy [18] Q&A Session Summary Question: Competitive backdrop and impact of fixed wireless - Management noted that inflation and interest rates are impacting the market, but churn rates remain low, indicating customer loyalty [37][38] - There has been no material impact from fixed wireless competition, as the company's offerings provide faster and more reliable service [39][40] Question: Buyback pacing and leverage - The company plans to maintain leverage below 3.5x, focusing on using free cash flow for buybacks and network expansion [41][42] Question: Cost pressures and mitigation steps - Management acknowledged inflationary pressures but emphasized ongoing cost containment efforts and operational efficiencies [44][46] Question: Fiber build costs and ROI - The company remains optimistic about fiber build ROI and has managed strategic sourcing effectively despite minor delays due to Hurricane Ian [52] Question: Trends in broadband and pricing power - There is a continued increase in customer usage and demand for higher speed tiers, which supports pricing power [73][76]