Cable One(US:CABO)2024-05-04 21:24Financial Data and Key Metrics Changes - Total revenues for Q1 2024 were $404.3 million, down from $421.9 million in Q1 2023, primarily due to losses in video subscribers [50] - Net income decreased to $47.3 million in Q1 2024 from $57.4 million in Q1 2023, with the prior year benefiting from a non-cash gain [30] - Adjusted EBITDA for Q1 2024 was $217.1 million, representing a 53.7% margin compared to $228.8 million and a 54.2% margin in the prior year [30] - Adjusted EBITDA less capital expenditures increased by $18.5 million or 13.9% to $151.2 million in Q1 2024 [11] Business Line Data and Key Metrics Changes - Residential data revenues decreased by $6.9 million or 2.8% year-over-year, driven by a 2.7% decrease in average revenue per unit [29] - Business data revenues grew by over $2 million or 3.7% compared to Q1 2023 [68] - Selling, general and administrative expenses increased to $90.4 million in Q1 2024 from $86.7 million in the prior year, with SG&A as a percentage of revenue rising to 22.4% [51] Market Data and Key Metrics Changes - The company added approximately 6,900 new residential subscribers sequentially, marking eight consecutive months of growth [24] - The aggregate fourth quarter annualized 2023 adjusted EBITDA of select companies in the investment portfolio was $613 million, representing a 24% growth compared to the previous year [7] Company Strategy and Development Direction - The company is focusing on enhancing network infrastructure and capitalizing on organic growth opportunities while also exploring strategic acquisitions [52] - The strategy includes targeting value-conscious customers and responding aggressively to competition, which has led to increased customer connects and reduced churn [46][24] - Investments of over $1 billion in network infrastructure over the last three years are aimed at exceeding customer needs for reliability and performance [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory moving forward despite ARPU declines, anticipating improvements as promotional pricing rolls off [65][82] - The company is optimistic about sustaining momentum in residential broadband customer growth and generating strong free cash flow [49] - Management acknowledged the competitive pressures but highlighted the effectiveness of their strategies in maintaining customer satisfaction and growth [24][46] Other Important Information - The company distributed $16.8 million in dividends and repaid $54.8 million of debt in Q1 2024 [31] - Capital expenditures for Q1 were $65.9 million, significantly lower than the previous year, with expectations to keep total CapEx below $300 million for the year [69] Q&A Session Summary Question: What is the outlook for ARPU declines? - Management indicated that ARPU declines are expected to ameliorate as promotional pricing rolls off and customer upgrades occur [65][82] Question: How are subscriber trends developing? - Subscriber growth is attributed to increased connects and reduced churn, with significant growth in competitive markets [93][24] Question: What are the implications of the new strategy on ARPU? - The new strategy targeting value-conscious customers has led to lower initial ARPU, but management believes these customers will be long-term value-accretive [105][106] Question: When will residential revenues stabilize? - Management did not provide specific guidance but expressed confidence that current strategies will lead to positive revenue growth in the future [97][98]