Welcome to the Anterix Fiscal 2024 Second Quarter Investor Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please also note that this event is being recorded today. I would now like to turn the conference over to Natasha Vecchiarelli. Please go ahead.

Thank you and good morning everyone. I'm Natasha Vecchiarelli, Vice President of Investor Relations and Corporate Communications and I welcome you to the Anterix Second Quarter Conference Call. Joining me today are Rob Schwartz, President and CEO; Ryan Gerbrandt, COO; Tim Gray, CFO; and Christopher Guttman-McCabe, Chief Regulatory and Communications Officer. Before we begin, I'd like to remind you that we will make forward-looking statements during this call regarding future events and our anticipated future performance, such as our commercial outlook and guidance. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Investors are cautioned not to place undue reliance on forward-looking statements. Additionally, we do not undertake any duty to update any forward-looking statements. Important factors and risks that could cause actual results to differ materially from the company's expectations are disclosed in our most recent SEC filings. These files can be accessed on our website or on the SEC's website. After Rob provides his prepared remarks, we'll open the call for questions. With that, I'll turn the call over to Rob.

Thanks, Natasha. Good morning everyone and thank you for joining us. As we continue to execute on our vision of an industry-wide movement centered on 900 megahertz, I'm pleased to share that there has been significant progress made this past quarter across a number of key initiatives. Today, I'll focus my brief comments on three areas that emphasize our confidence in continuing to deliver value to our shareholders. First, I'll discuss our recently announced share repurchase program, which we will leverage to transform the anticipated contracted proceeds into shareholder value. Second, I'll provide examples of activities, accomplishments and industry thought leadership that are important milestones on our path to move the utility industry at scale to 900 megahertz private wireless broadband. And third, I'll provide an update on our customer demonstrated intent scorecard. So let's start with reviewing our new share repurchase program. One way that we're marking our confidence in our future is through the robust share repurchase program we launched in September. Under the program, we have the ability to repurchase up to $250 million of our outstanding shares of common stock over a three-year period. With our current visibility, we see near-term opportunities in excess of this $250 million. We remain fully funded and are forecasted to have free cash flow for fiscal 2024. In addition, we expect to receive $53 million in proceeds from our existing contracts during the remainder of this fiscal year. As we have said throughout our journey, Anterix is doing more than simply providing spectrum. Through our ongoing collaboration with our customers and a host of solutions providers, Anterix is enabling a nationwide platform for utilities that will support a resilient, secure and clean energy future. One of the most significant validators of our approach came last month during the Utility Broadband Alliance or UBBA Annual Summit. As many of you know, Anterix created, funded and actively managed UBBA. Since 2019, UBBA has held an Annual Summit, where leading utilities and the industry ecosystem come together with a specific and valuable focus of sharing experiences, use cases and plans to build private wireless broadband networks. This year Xcel Energy hosted this dynamic sold-out event in Minneapolis with more than 500 participants in attendance, including representatives from 35 utilities and increased C-level participation. To put it in perspective, the utilities in attendance represent more than 60% of our spectrum value. We also are pleased to have a group of investors and an equity analyst attend to witness this event directly. My thanks to those who participated. At the show and monitored panel where several Senior Xcel Energy executives, including their COO, shared insights on the 900 megahertz private wireless LTE investment and how we'll bring valuable business outcomes in support of Xcel's secure, resilient energy future. What was also visible in nearly all the sessions was that 900 megahertz broadband was front and center. Our Anterix Active Ecosystem members were very well represented showcasing 900 megahertz enabled devices and solutions. An Itron and Anterix's Active Ecosystem member and one of the industry's most respected technology and solutions providers announced during the show that it now offers several 900-megahertz compatible devices, giving utilities and cities the flexibility to deploy and operate Itron Solutions across Anterix-supported private LTE networks. In the Anterix Booth, we offered a live demonstration of CatalyX, our turnkey subscriber management and roaming solution that helps utilities realize even greater benefits from Private Broadband Networks. We believe the growth of this forum directly correlates to our growing market and the opportunities we are driving and experiencing. Executive acknowledgment throughout the event that Private Wireless broadband is a critical asset underpinning most, if not all, of their primary utility objectives strongly aligns with our effort to move the entire sector forward. The message that 900 megahertz is a critical asset was again echoed last week when the EEI Foundation hosted a wildfire mitigation panel with our own COO and executives from SDG&E and Fortis. The discussion, attended by representatives of more than 30 utilities, centered on combining a 900 megahertz private LTE network with cutting-edge technology solutions to address critical existential issues facing the utility sector. SDG&E shared their updated experience on the deployment and successful operation of their wildfire mitigation solution. This executive level industry focus has been reflected in the continuing significant movement we see within our demonstrated intent scorecard. As a reminder, the demonstrated intent metric that we introduced several quarters ago, tracks the activity and movements of utilities across a range of 20 indicators toward a 900 megahertz LTE contract. To summarize the scorecard movement, from just August until the beginning of November, the utilities below the demonstrated intent threshold, seven have added a total of 11 demonstrated intent indicators to their scorecard. Examples of these include the identification of a Senior Executive to lead the private LTE process, the provision of pricing data, exchange of contract language and more. Currently, 16 utilities representing approximately $900 million in potential contract proceeds have crossed the demonstrated intent threshold, a point at which we believe indicates a high degree of confidence that a customer has clearly demonstrated their intent to move forward with Anterix on a 900-megahertz contract. To give you a sense of the scale and intensity of the movement in the last three quarters since we've introduced this measurement, we've recorded positive movement by customers on more than 60 new measurable indicators of intent throughout our DI scorecard. The totality of this activity and the indicators recorded on our scorecard underpin our confidence in continuing to deliver scale value to our shareholders. And before I close, I'm pleased to note that we announced just a few days ago Wassim Akhdar has joined Anterix as our Senior Vice President of Product Innovation from a long career of bringing innovative solutions to utilities. He'll oversee the delivery of products and solutions that harness utility-owned 900 megahertz private LTE networks in collaboration with our Anterix active ecosystem. We expect these solutions to produce value across the industry for utilities, ecosystem members and Anterix shareholders. At Anterix, we continue to view the opportunity before us not just by the water passing over the dam, but by the amount of water swelling behind it. I'll close with a summary of why I remain highly confident in our ability to continue delivering value to our shareholders. The industry movement towards 900 megahertz represented at forums like UBBA's Summit, the clear demonstrations of utility progress through our demonstrated intent scorecard; and finally, our confidence shown through our share repurchase program based on our visibility of the near-term opportunities in excess of $250 million. And with that, I'll turn it over to the operator for questions.

Thank you. We will now begin the question-and-answer session. At this time, we will take our first question, which will come from George Sutton with Craig-Hallum. Please go ahead.

Thank you. Nice to have you all in Minneapolis recently for UBBA. So I'm curious if you've ever quantified, because of the stark amount of both utilities and ecosystem partners that were represented at UBBA. Have you ever quantified the amount of investment being made by others to support and benefit from this ecosystem?

Hey, George, good morning and thanks for the Minneapolis shoutout. It was great to be there for the UBBA event. I think I want to make sure I understood your question clearly. We do focus on the spectrum spend clearly of the ecosystem. As we talked about, we had 60% roughly of our spectrum value represented at that recent utility broadband aligned to that in Minnesota. When you expand into the full ecosystem of partners that we have, we've said in the past that our spectrum represents, let's just say, roughly a third of the spend. That varies based on the size and the nature of the build-outs. That's just of the network deployment costs. But obviously, the private LTE systems are part of much broader solution sets and whether that's part of multibillion-dollar AMI RFPs, or whether that's part of large-scale SCADA systems that are being deployed or integrated into larger grid modernization projects. When you look at the percentage of what the spend is for just the spectrum, it's a relatively small piece compared to the grid modernization budget. Utilities are spending upwards of $150 billion a year in aggregate on capital projects. And so you can imagine that relative to what we're talking about being a much smaller element of the overall budget.

Hey, George, it's Chris. And while we don't track the exact investment, one of the things obviously we're tracking membership in the active ecosystem we talk about that regularly, but we also track those that have commercial-ready products and that number keeps growing. So, Itron, Rob referenced a few minutes ago. We're now at 23 companies that have commercial-ready products for 900 megahertz. Within those companies, for some of them, there are a multitude of products. So we are seeing incredible third-party investment in this opportunity and platform that we're creating.

Well for what it's worth we summarized our takeaways as we're waiting on the inevitable. So I'm curious separately if we could talk about the unfortunate situation in Hawaii and what happened there. And perhaps how boards at utilities have begun to respond with really moving this up to a much higher level of need rather than just once?

Sure, I'll begin with that and Ryan can provide additional insights. Firstly, we are currently at the EEI Financial Conference in Arizona, where executives from various investor-owned utilities are discussing crucial issues with their investors. Wildfire mitigation is a major topic of concern, particularly in light of the recent events in Hawaii and the ongoing challenges that many utilities face. This issue has evolved from an operational challenge to a logistical concern, and now it has become a significant financial liability. Ryan can elaborate on this, as he was involved in a recent EEI foundation call with the SDG&E wildfire leader. They discussed the use of private LTE 900 megahertz technology in their wildfire mitigation plan, which has already been implemented in several circuits with positive results. We believe that this successful application of solutions will continue to be adopted by other utilities.

Yes. Hey, George, Ryan here. Let me add a couple of pieces of commentary. I agree with you, first off, it’s devastating to see the impact in Hawaii and the theme of the conversation, as Rob said, it's kind of not unique to Hawaii anymore unfortunately. Now part of the conversation we had with the foundation and this call was moderated by David Hutchens, the CIO of Fortis Energy, was very specifically focused on just how pervasive these types of risks and threats are starting to become, moving out beyond the West Coast. There's a realism to it as we start going through these situations around how do we be better prepared to deal with risks proactively. One of the specific topics that we were talking about with San Diego and one of the benefits of the falling conductor protection solution, it's one of those technological solutions. It's really purpose-built to be able to detect, isolate and clear a line before it becomes a potential risk to ignite a fire quite different than detecting a fire and being able to drive mitigations and being able to slow it down or dispatch resources and crews. It has been a very important conversation as Rob said. The risk attributes of it are very pervasive. We're in many of these conversations actually here right now in Arizona at EEI. It is really a topic of the event is to continue to manage risk and wildfire mitigation being one of those existential ones that are just impossible to ignore given both the impact on human lives and the potential impact to drive utilities into bankruptcy. Our role continues to be identified and just how important it is to drive the advancement of multifaceted solutions to be able to deal with these kinds of risk, and technology is a major, major component to that in addition to physical aspects like dealing with the tree canopy and pruning even elements of hardening and covered conductors, etc. But the advancements of technologies are necessary and critical components of that architecture and being able to put those out there at pace is part of the solution.

Yeah. And George, Chris, I'll just finish it up by saying the rating agencies, right? So Moody's, S&P, Fitch all of them are making this a focus. Fitch does a state of the sector breakfast every year that sort of helps to kick off this EEI financial that we're all at and the entirety of their focus during the breakfast was on wildfire. As Ryan and Rob referenced, the risk issues and the potential for bankruptcy, the existential elements of its payouts, things like that. It is, as Ryan referenced, sort of front and center here, but it's really illustrated in Fitch spending the entirety of the state of the sector breakfast on this issue.

Interesting stuff. Thanks, guys. Appreciate it.

Thank you, George.

And our next question will come from Mike Crawford with B. Riley. Please go ahead.

Thank you. Is there a second milestone you're expecting to occur with Evergy this quarter?

Mike, hey, this is Tim. So Evergy, they prepaid the $30 million at the beginning of the deal right after we signed that one. I don't know if you're maybe referencing Exelon, but we've got money due from them this quarter roughly $20 million, excuse me, Xcel not Exelon; I got the wrong name. But $20 million is due this quarter from them just roughly the same as we got last quarter.

Okay. And then can you just remind me where the other $32 million was coming in I guess in the March quarter?

Correct. Yeah. So we'll have another $16 million from Xcel and then we anticipate $15 million from LCRA at the beginning of that deal, which should come in actually December time frame.

Okay. Great, Tim. And then I suppose, what I can tell from your demonstrated intent is that you've had one additional utility, representing about a $50 million licensing opportunity move into above the threshold in the last three months. Is that accurate?

That's correct.

And our next question will come from Simon Flannery with Morgan Stanley. Please go ahead.

Great. Thank you and good morning. First on the buyback nice to see the new program and the initiation on that, how are you thinking about cash balances and liquidity? And maybe you can kind of talk about the LTE OpEx burn here. But should we think about basically taking the $53 million out of the ongoing OpEx and then use that against buybacks? Is there any other way to think about it?

Yes, Simon, this is Tim. We expect to maintain between $40 million and $50 million in cash reserves to address our annual operating expenses, and any surplus will be considered for ongoing clearing. Beyond that, we will view it as excess liquidity that we will allocate to the buyback program. We anticipate being quite active in this new program right away, so you will start to see the effects in our reports over the next few quarters.

Great, great. And the T-Mobile and Dish 800 megahertz is sort of coming to a head right now. The DOJ gave them I think until April. But I think Dish had said recently that their probability of being able to buy that spectrum from T-Mobile has dropped. There are other counterparties out there potentially looking at it, potentially for private networks. Would you be able to just comment on how that 800 fits against your 900 either for you as a partner or as a competitor? Would you have an interest in working around that?

Hey, Simon, it's Rob. We are familiar with that spectrum, especially since it originated with Nextel Communication. We're actively monitoring it and have a good understanding of its potential. Generally, we are always looking for opportunities in spectrum to benefit our shareholders. While we have ongoing discussions in court and with stakeholders, we also keep up with the research from you and others. It's challenging to predict outcomes, but we believe that, if the spectrum goes to auction, it will likely end up with a strong carrier network that serves consumers and enterprises well. There are numerous challenges to overcome before that happens. We would certainly explore opportunities, whether in collaboration with current or future owners of the spectrum. Returning to your earlier question about the buyback program, I want to emphasize that our confidence in our short-term prospects is what supports the $250 million buyback initiative. We have a clear understanding of our activities with these utilities at both UBBA and EEI, which gives us strong confidence that we will effectively use this program soon.

Good. That's helpful. And then maybe just one last one. We continue to talk about LTE, but the carriers typically like talking about 5G and moving most of their traffic and most of their subscribers on to 5G devices covering most of the country now. So what are you hearing from the utilities? And as this 5G ecosystem builds up, 5G stand-alone cores are out there? Is there more interest in having a combo LTE 5G solution?

Yeah. I think, look, carriers don't like technology risk in any way. And so one of my favorite quotes from one of the leaders of Southern Company, the pioneers in using private LTE talks about 4G as being their workhorse. We've got to realize these LTE systems are replacing technologies that were put out 15, 20, even 30 years ago. What we're putting in place now, and it was a great forum at the Utility Broadband Alliance where we, along with Ericsson, Nokia and Qualcomm talked about the future of 5G on 900 megahertz, of which all of them stated their high confidence of that migration path. The EEI and LTE is right, the evolution, but also the forward compatibility of the gear that's being sold by leaders like Nokia and Ericsson. What utilities are putting in place now as infrastructure will be software upgradable to be able to utilize 5G when they need it. There's no use case today that is compelling and driving that, but I'm certain there will be at the right time. Remember, we're signing 20-30 year relationships with these utilities. Over that lifespan, we will continue to be their trusted adviser and help them figure out that path of evolution. We're working with the utilities and a lot of those ecosystem partners in the 3GPP process to make sure that our brand continues to be supported through all the new revisions that occur. We're always looking at other ways of expanding our spectrum opportunity in the future should there be any additional needs, as utilities both serve their own needs but they're also serving needs of other folks within their service territories. These could be municipal and cooperative utilities or other industrial entities. We think there are opportunities to take this initial infrastructure and continue to build upon it, both in services and products, but also expanding to serve other parties, like-minded parties, as we like to say.

Okay. Thank you.

Thanks, Simon.

Our next question will come from Walter Piecyk with LightShed. Please go ahead.

Thanks. Rob, you've had I think $500 million or so in Phase III for, I guess, about a year; if there was a Phase IV that you created where someone pans out, what do you think that would be in that mix of $500 million?

Yeah. I think we’ve had those spaces out since we've launched our commercial operations post the FCC ruling. We had demonstrated intent really to give you that granularity to think of it from a different facet. We are measuring element by element of the things that utilities are doing that are moving them through those phases and really driving them towards a contract process. When you're looking for that granularity within that phase, our demonstrated intent, as we call it, is probably the right way to understand that progress. When you see the movement that we've had just in the few quarters that we've been reporting that continues to expand even as we've had entities like LCRA signed and they obviously fall out of that in a good way, we continue to see growth in those as we say above that threshold where they’re showing enough elements to show that they’ve demonstrated significant intent which gives us confidence about them contracting.

But maybe I'm confused. Is demonstrated intent a different tracker? Is demonstrated intent after someone has been in the Phase III category, or how do you describe it? So, is demonstrated intent after that, or is it before that?

DI is covering Phase II and Phase III specifically, focusing on the 16 deals we mentioned. As Rob noted, it aims to provide more overlap and detail with the 20 metrics we discussed. For instance, various activities occur in the phases of the pipeline. In DI, one specific aspect we highlighted is the process of passing contract papers, which is an indication of intent as we begin to negotiate terms. While this occurs within the pipeline phases, we do not isolate it into a distinct phase because we can't break it down to that level of detail.

That sounds like negotiation and commitments. I would think that all of DI should be in Phase 3, right?

Well, not all of them are at that level of step. Yes, one of 20 things. So, there are several other pieces that are equally important while we're even getting prepared for that. And that's why we've got some of that kind of later stages of Phase 2 is to work in the way in Phase III.

And just also we've had entities that have jumped past those phases, some of the deals we've done where they've gone from a standing start relatively below the threshold in DI and not in Phase 3 and suddenly accelerated, for one reason or another they've moved forward and contracted. It’s two different facets of the way we look at our customer flow, but we're happy to go into it in more detail with you.

Okay. And the DI I guess I could ask my first question may be targeted DI. So, if there's a DI Plus or DI MAX in media terms, where someone's demonstrated intent is out and getting ready. Like how much of the demonstrated intent is getting you closer to actually getting something on the tape?

Yes, I think it's important to mention our third point here. Regarding our share buyback program, we have visibility on our short-term opportunities, which I believe addresses your question, Walt. We have a strong influence on these opportunities. While we can't predict exact timing, we are observing a broad movement and are working to pinpoint the key indicators. I think that best describes the scale of what we're experiencing.

I have a question for Chris regarding some comments made by Biden yesterday. I'm trying to recall the name, but Commissioner Carr mentioned some negative views, suggesting it was unwise to expect that spectrum to become available soon. Can you share your perspective on whether any of that spectrum will be released? Is this something your utilities might consider, similar to how they looked at CBRS in relation to the low-band spectrum you can provide?

Yes. I mean, Walt, I think, first of all, I think the process of getting that spectrum and the nation's spectrum plan to market will take some time. We're always excited to see potential spectrum opportunities as Rob referenced, whether it's or other bands that we think can be accretive and valuable and beneficial to our shareholders and additive like CBRS can be complementary to our 900. We definitely track that. That spectrum will have to go through a process at the FCC. Much of it will likely be auctioned. We certainly are aware of it. What we're doing and you've heard us talk about this, you've heard this theme throughout many of our calls is we're building a solution set sort of an ecosystem of solutions that makes our spectrum different than other spectrum opportunities because it's wrapped into 110 companies and 11 utility strategic advisory board members. All the things we talk about in terms of creating value and creating solutions for the sector. But certainly if other opportunities from a spectrum perspective come to play, we will be actively aware and participating.

I mean where do you think the government is right now? Obviously, the government can change shortly. But where are they right now, in terms of shared spectrum? There's been a lot of debate around CBRS. I mean the cable guys claim they're using it, but it doesn't seem like it's actually getting deployed aggressively, yet. Your customers have integrated it. Do you think that shared spectrum is something for the future, regardless of who's in charge at the FCC? Or is it the kind of lost its luster?

Yes. So micro, macro. So I'll take micro. The sector we're serving, they want and need control. They want and need certainty. The idea of relying completely on a shared spectrum opportunity is just not in their core way of thinking. When you talk about CBRS, there are some utilities who bought those PoW licenses even those have some unique aspects and traits to them. We likely will see many of them pursuing Anterix in 900 megahertz. Then I'll go macro, shared from a macro perspective I think there are spectrum bands that only can be shared going forward. I don't think the concept of shared will go away. I think we'll continue to see it from time to time and in certain bands. There is a little bit of a political element to it. Shared is appreciated more by the Democratic side of the aisle, and license and exclusive generally, but both parties I think understand the benefit of both sides. The luster rises and falls from time to time, but I think we'll see both a shared spectrum model going forward and an exclusive license auction model going forward as well.

Okay. And then, just last question. Given the low-band nature of your spectrum, have you received any inquiries anyone sniffing around in the satellite industry, perhaps LEO constellations that are planned or in process that are looking for some additional uplink that they could use, in order to achieve their goals of trying to provide satellite connectivity to phones?

Yes. Well, I think we're watching and talking with leading vendors on all those fronts, nothing specific to really share there. We're really focused on saying this low-band spectrum has such high value for our utility partners and what they're doing. Absolutely, the eventual hybrid approach of terrestrial and satellite makes sense for them and others. It’s not as a replacement or as a complement. We foresee that this will be a product that will also continue to supplement it. It's just like what we've watched over the decades with carriers evolution starting with low band and all the supplemental things they've added to those networks, the layer cake, other elements of technologies to strengthen those systems. We'll see the same thing here. 900 will be the foundational enrollment for these utilities and other critical infrastructure and we'll expand from there. I'm sure that will include satellite over time.

I’ll roger that. Thank you.

Thanks, Walt.

Thank you.

And this concludes our question-and-answer session. I'd like to turn the conference back over to Rob Schwartz for any closing remarks.

Thank you, operator and thank you, everybody for joining us today. We're really looking forward to continuing to share our progress over time, and we'll talk to everyone soon. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.