Good afternoon, ladies and gentlemen, and welcome to the ATN International Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Justin Benincasa, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us on today’s call to review our second quarter 2020 results. With me here is Michael Prior, ATN’s Chief Executive Officer. During the call, I will cover the relevant financial information, and Michael will provide an update on the business and outlook. Before I turn the call over to Michael for his comments, I would like to point out that the call and our press release contain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operating results and are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also, in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our operating results, please refer to our earnings release on our website. I would also like to note that we are in a quiet period with respect to certain FCC-related auctions, and as such, we will not be in a position to answer any questions related to ongoing FCC auctions. And with that, I will turn the call over to Michael.

Thank you, Justin. Extra disclaimers this quarter, always fun. So second quarter results show that ATN is fairly well positioned to weather this ongoing health crisis, but of course, we are conscious of the personal and economic toll it is taking on our country and on the communities we serve. Back to quarterly performance, it was really quite good. We have seen demand for communication services remain strong, particularly, and not surprisingly, from home users of high-speed internet, and we are well-positioned to meet that demand. Our extensive investments in recent years have given us the capacity and reliability that is critical to support our customers and communities. This is about much more than network investment. However, our ability to succeed amidst difficult operating circumstances is due in large part to a sense of urgency and a can-do attitude on the part of our operating teams. They adapted remarkably well and are continuing to deliver for our customers. Looking forward, we think there is more we can do to improve our operating efficiency, meet demand, and win share. We are not waiting for the situation to resolve. We are moving forward in this new environment. I should note that we are well aware that things could get worse, particularly in terms of the local economies where our businesses are located. We are preparing for that likelihood and will further adjust our operations and spending as necessary. Now, let me turn to our individual operating segments, starting with International Telecom. Segment revenue for the second quarter here was relatively flat year-on-year, but we reported a significant increase in EBITDA and operating income. Both trends reflect some pandemic impacts. The pandemic caused some downward pressure on mobile revenues, particularly prepaid revenue and overages and roaming. Also, we experienced lower revenue due to travel restrictions in multiple markets. Offsetting those factors was very high demand for home broadband, as already noted, as well as for cloud services and connectivity solutions to enable remote working for business customers. On the expense side, the pandemic reduced sales, marketing, travel, and roaming costs, and we took additional measures to reduce spending. We will continue that vigilance. Looking at subscriber numbers, fixed data subscribers rose by more than 10% year-over-year, a somewhat faster rate than previous quarters consistent with the pandemic-induced increase in demand. Mobile subscribers dropped largely reflecting lower end prepaid losses. We think this is roughly equal parts pandemic related and losses to the competition. Video subscribers declined at an 8% annual rate, an uptick in linear video subscriber losses that was largely driven by the loss of some large hospitality and condominium customers. Voice subscribers actually increased again due to the success of bundled offerings in some markets. In our first quarter call, we said that we were concerned about the negative impact of lower tourism activity in many of the markets we serve. In the second quarter, we saw some signs of that as some hotels and restaurants, and other tourism-driven businesses shut down and cut services. However, the impact on our overall business was relatively minor. Sitting here today, I think it is likely the next couple of quarters will be worse in that respect if there is no resumption expected soon on tourist visits, but we have handled downturns before, including the financial crisis and recessions that impacted tourism in these markets. This one may bring new challenges. So, we will continue to be cautious on spending, and we will look for ways to enhance free cash flow as part of our contingency planning. As Justin will discuss, we expect capital spending for this segment to be below our initial full year forecast, though we are continuing to invest in our networks and services. As discussed last quarter, we are also actively working to adapt the business in other ways and to develop service offerings and capabilities that help our customers manage through this environment. We made a lot of progress in the past few months with digitizing our customer and employee interactions, and there is more that can be done. Moving to the U.S. Telecom segment, there was another good quarter here as well. While the year-on-year comparisons are not likely to be as favorable over the second half of the year, we expect continued consistent performance on a consecutive quarter basis. The driver for that consistency is longer-term carrier service contracts and government subsidy programs like CAF II. We have also seen steady and increasing demand for our retail offerings, particularly the rural broadband services we have deployed as part of the CAF II program. This segment is less sensitive overall to coronavirus-related pressure than our International Telecom segment. Although the pandemic did cause delays in our FirstNet build as we have noted and there is, of course, some risk of more significant impacts if the environment worsens. Furthermore, while we do not currently see a great deal of downward pressure, the pandemic has curtailed certain operations and sales activities, making it harder to complete large initiatives or grow customers and revenue. Our teams have been doing a great job coping with the restrictions and the changes, but it certainly slows us down. In Renewable Energy, our operations were negatively affected by the pandemic and restrictions as some large industrial customers were forced to close factories and mills due to government restrictions in India. Those customers renewed operations once they had made changes to their facilities and processes, and the revenues have recently returned to normal. Moving back to ATN as a whole, I wanted to take a moment to add some comments about our people. Our business leaders and their teams across all of our operating subsidiaries and supporting operations at the parent level really stepped up in a very tough environment. They found ways to enhance services for customers with changing needs by increasing data speeds to many homes without charge and by extending grace periods for payment. They moved quickly to add additional resiliency and capacity to our networks. They distributed temporary home broadband solutions using our mobile networks and capabilities. They helped businesses move to remote work environments, and they worked with governments to help deliver health monitoring and movement solutions. One specific example of these heroics among many that stands out to me was the effort to rapidly deploy new fixed wireless broadband nodes and Wi-Fi hotspots across some underserved areas of the Navajo Nation to support students working from home in that hard-hit community. This resulted in the upgrade of over 50 sites and more than a doubling of speed and capacity of the existing network supporting a 50% increase in traffic. Our engineers and others worked tirelessly to get that done, and in a great collective spirit, we were also assisted in that effort by temporary spectrum license grants from some national carriers. In turn, we helped other carriers with temporary grants to use spectrum in places outside of our main service area. It went beyond customers; there was great work to support our employees and great work in turn by them in adapting to the changed environment. Our IT folks were able to securely and effectively enable remote operations and collaboration. Our customer care group maintained crucial support while at the same time relocating people and systems. Our financial and operational staff ran through rapid resiliency assessments and took measures to further strengthen our position. It was great stuff and fellow investors in ATN should be grateful. Of course, the work does continue. We’ve learned to do many things well, but there are some areas of challenge. In particular, it is harder to win new customers, and it’s harder to launch new strategic initiatives or relationships, but it is by no means impossible, and our ambition for growing shareholder value is as great now as it was before the pandemic. To summarize, we executed well in a difficult environment. Our telecom services are in demand in both our international and our domestic markets. We are concerned about the effect of the pandemic on the economic well-being of our markets, particularly the island economies given their dependence on travel and tourism. That said, we have the people and financial resources to manage through this difficult period and potentially find opportunities to extend our platform. That’s it for me. Justin, back to you.

Thank you, Michael. Just to cover some financial numbers. For the second quarter, total consolidated revenues were up slightly over last year at $109.1 million and consolidated EBITDA was $29 million, a 19% increase over the second quarter of 2019. Consistent with the first quarter, the recovery of our U.S. Telecom segment and increased demand for our fixed services, as well as cost savings in the International segment, were the primary contributors to the strong year-on-year EBITDA comparisons. Looking at each of the segments and starting with International Telecom, revenues were $80.1 million, up slightly from $79.9 million last year, and EBITDA increased 17% to $28.7 million. As Michael noted, the strong EBITDA performance reflected a change in our revenue mix with increased demand for our broadband services and cost reductions across several expense categories. As we noted in our release, approximately $1 million of the savings were one-time in nature and unrelated to the overall operating cost reductions we saw in the quarter. International Telecom segment capital expenditures in the quarter totaled $9.4 million and $19.9 million year-to-date. We now expect the segment’s full-year CapEx to be between $35 million and $40 million, approximately $10 million below our original forecast due to project deferrals and delays, and we will continue to monitor any potential project delays as we move through the year. In the U.S. Telecom segment, revenues were $28.2 million for the quarter, up from $26.4 million a year ago, and EBITDA was $7.5 million, up from $7.1 million in the second quarter of 2019. Similar to the first quarter, and as Michael noted, these increases were primarily from the CAF II federal support revenue that began midway in the second quarter of 2019 and increases in carrier service revenue as part of the FirstNet transaction. Michael mentioned this, but I will just note it again: we talked about our first quarter call, we expect very little seasonality in revenue and EBITDA this year compared to past years based on the terms of our carrier contracts. This will be most visible in our third quarter comparisons as Q3 2019 was the highest seasonal revenue quarter last year. With respect to site construction and related revenue under the FirstNet agreement, the overall timing has been pushed out due to permitting and construction delays caused by the pandemic. We currently expect construction revenues to begin in late 2020, but this could be further delayed by the current coronavirus resurgence in parts of the country. As previously mentioned, the delays in construction revenue should have little impact on operating income as revenues will be largely offset by construction expenses. The segment’s capital expenditures in the quarter totaled $6.9 million, and $8.9 million year-to-date. Similar to the International Telecom segment, we expect capital expenditures in U.S. Telecom to be lower than what we originally forecasted. We now expect to spend approximately $25 million to $30 million versus the original $35 million to $40 million, with approximately $10 million versus $20 million of that on towers and backhaul to support the FirstNet build-out. In the Renewable Energy segment, revenues were $900,000 in the second quarter compared to $1.4 million last year, and EBITDA was a negative $134,000 compared to a positive $805,000 last year. As we noted in the release, pandemic-related restrictions resulted in some of our customers having to shut down operations in the second quarter. As of today, most of those operations are back to normal. We had consolidated net income for the quarter of $4.7 million or $0.30 a share, and this includes a $2.3 million tax benefit in the quarter. We now anticipate an overall effective tax rate of approximately 5% for the year as we expect to benefit from NOL carry-back as part of the CARES Act, also included in operating expense for the quarter of $1.6 million of non-cash stock-based compensation expense and $1.8 million of costs related to early-stage initiatives in the U.S. Telecom segment. Just quickly on the balance sheet, we had total cash and short-term cash investments of $126 million and total debt outstanding of $84.6 million. And with that, operator, we would like to open the call up for questions.

Our first question comes from the line of Ric Prentiss with Raymond James. Please go ahead.

Thanks. Good morning, guys.

Good morning, Ric.

I hope my thoughts are with everybody out there, families, employees, yourselves in this COVID-19. We are also glad to hear things are doing well, and you are helping the whole situation.

Thank you. We agree. Thank you.

Just one quick one, it looks like maybe the re-categorization of the financials between mobile and fixed and carrier services, etc., might have changed. Can we get those? Believe me, we have had a lot of earnings, some of it a bit blurry-eyed. But if that is true, that it looks like some of the numbers changed. Can we get the 2019 quarterly numbers restated also or re-categorized as they are now?

Yes, I think we did correct the original one on that, but I will find out where that went. I thought we filed that, Ric, already, but let me check on that. I thought it was out there.

Okay. Yes, just because it looked like our 2Q numbers were matching up, but, yes, if you just check on that, that would be great. More importantly, Michael, and I apologize I was on an earnings call that went long, but in the prepared or in the press release you talked about your concern about the economic impact that long delays in a return to tourism and travel could affect your international markets. When would you typically see that? Because to be blunt in 2Q, you came in quite strong; things were better than we had thought they would be. So as you think about a potential concern on travel and tourism, what kind of seasonality or quarter should we think that might manifest itself?

Well, in our markets, they have different high periods. So, we have the sort of more southerly latitude Caribbean markets that are more concentrated in the winter and early spring. So, mostly first quarter, some a little second, and a little fourth. Then in a place like Bermuda, it’s actually between second and third quarters, is most of it and so some of that would have been already. The different economies have different impacts from tourism. All the island economies, as I said, had some real impacts from tourism, but it’s more significant in a place like the U.S. Virgin Islands, which doesn’t have the same financial service and other side of the economy to the extent. What has happened so far, though, is businesses do have some short and some ability to adapt and wait and in some cases, particularly in the U.S. markets, including U.S. territories, the federal government, of course, helped bridge that. Just the concern is that if it extends, and if they’re forward, looking forward to a prolonged period where they won’t see the traffic, then they may make further adjustments down to their business, reducing jobs, reducing their own purchasing and economic activity, and so there can be a ripple effect. We did see, as I noted in my comments, aspects of this in the financial crisis and the recession that followed it; it took a period of time. It didn’t take things to zero by any means, but it had an impact.

Okay. One other quick one, Justin, you mentioned a one-time $1 million benefit. What was that related to?

There, I would call them like either one-time credits we got – we got a power credit, for example. It was one of them. And so, we resolved a few disputes that we had outstanding. They are just not going to be recurring, so I wanted to point them out.

Okay.

And Ric, just to follow-up on that, we filed an 8-K/A on June 8 with correcting those 2019 quarters.

Okay, alright. We will double-check all those inputs. And then for quite a while, obviously you guys have been making some investments into new businesses, always with the illusion that at some point you will be able to share with us some more thoughts. COVID-19 may have changed some of the timelines, but how are those businesses doing? What was the burn rate in the quarter? And when do you think we will be able to get some more insight into what the opportunity set might be for those new businesses?

Yes, I will cover the burn – the burn rate was $1.8 million on those companies, which is just slightly up, call it a couple of hundred thousand over a year ago. Now I will let Michael talk about the current status.

Yes, I think in terms of the ones that run through the top part of our income statement, I think you saw in the segment information that our managed services investment is picking up steam and doing well. I think it has definitely more room to run, quite a bit more room to run; so, it was timely really for the pandemic and the demands of our commercial and government customers. So that’s positive. On the other side of the consolidated piece of those kinds of businesses, you have the in-building business, the Geoverse. It’s still early for what we are trying to do, which is not DAS; it’s a true active neutral host environment of next generation. So, as a whole, it’s still early. We are getting momentum. We are getting places to build out that were slowed a bit by the pandemic. Sales activity was slowed, and owners of real estate have obviously paused, particularly in some of the sectors hardest hit by hospitality and commercial. But we are still very invested in that and believe the opportunity is significant. We have seen things too, like the commercial customers coming to us for solutions using our connectivity platform as a way to do tracking and things like that to enable safer usage of facilities. We are very positive there, but early. On the balance sheet side of it, two-thirds of that number is really represented by our investment in Australian Tower Co., a neutral host provider, and initially got off to a little bit of a slow start, but it is also picking up very positive momentum lately, winning build suits and pursuing larger opportunities. So, we feel pretty good about it, but that’s I guess probably all in there.

Thanks for the color. I hope you guys stay well.

Alright, thanks. And you too.

And your next question comes from the line of Greg Burns with Sidoti & Company. Please go ahead, sir.

Good morning. So, a couple of follow-ups pertaining to Geoverse and just hoping to better understand that business and the opportunity there. Could you just talk about why an enterprise or a building operator or maybe a construction company might want to deploy this type of service as opposed to maybe just using Wi-Fi or some other connectivity? What is the benefit of a Geoverse private LTE type of service over other solutions?

Sure. The deployment utilizes some of the technologies that are coming around 5G, and so that means you can deliver many more connected devices at one time, lower latency when compared to Wi-Fi. The other thing when you compare it to Wi-Fi is it’s a much more secure, it’s a carrier-grade, carrier-class protocol, which is inherently much more secure than the Wi-Fi environment. Finally, it also integrates with connectivity to the macrocellular environment, right, so in-building coverage. So it’s really a combination of all of that, and being able to put out a much more robust and secure platform to take advantage of what we are increasingly seeing people really building solutions for. We think those solutions are going to run over that type of platform increasingly rather than Wi-Fi.

Okay. And then could you just help me understand how Geoverse that deploys the service? What is the model there? Are they building out infrastructure, or is it a site-by-site case? From a customer’s perspective, how does the economic model work? Is there a capital – upfront capital expenditure? Is the recurring service all bundled? Could you just maybe talk about that a little bit?

Sure, I can talk about that a little bit, but let me caveat it to say that particularly the last part in terms of the economic models, I would say it’s early innings. I don’t think we can speak with certainty as to the way it will work. What we feel strong about is there is a value proposition, and we understand the building owners and tenants understand that value proposition and increasingly are looking at it. That being said, we are doing two things. One key thing we provide, which we call GeoCore, is a network platform that makes all the connectivity work. We have some cases where we are partnering with folks who have the ability and want to deploy the fixed infrastructure on-site, but they want to connect it and have our platform operate. So we call that network as a service, and I think there is a lot of interest in that and a lot of discussion about that. But we are also doing and have done build-outs where we provide a complete solution where we build out the wireless nodes and connect them to that platform. We are open to both; for some partners, they want to own that; they may have a lower cost of capital and they want to invest in that, while for others, they would just as soon we do all of that.

Okay. I guess it sounded like the pandemic has maybe slowed the ability to sell some of these newer solutions, but when is there a point where more investment will be required, or how should we think about the investment requirements of early-stage start-up businesses like this that maybe start to gain some traction? At what point might you need to commit more capital to this business?

I think success drives that. There is not that there is no preparation capital, and we have already invested significant capital in developing the capabilities of the product and technical capabilities developing strategic relationships and customer relationships and things like that, but success is really going to be the main driver. Contracts to connect to either on the NASH front or builds, and of course, the build side if we are doing more complete turnkey, that will require more capital, but we think that is a nice situation because we think we have plenty of access to lower-cost capital to do that. Follow the news; I think the industry generally, not just us, is likely to see momentum and builds in 2021 and beyond. It could pick up a little steam in 2020, but we are still in somewhat of a restricted environment and still early on some of the technology adoption.

Great, thank you.

Yes.

And your next question comes from the line of Allen Klee with National SEC Corp. Please go ahead.

Yes, hi. My apologies, because I joined late if this was asked, but Justin, if you could clarify two little financial things on the cash flow statement. What was the purchase of intangible assets and strategic investments under cash flow from investments? And then, well, you were repurchasing some of your non-controlling interest to the tune of close to $4 million. Could you just explain those two items? Thank you.

The latter one is actually subsidiaries; our subs buying back some of their own stock for minorities.

Yes. And the first one, Allen, unfortunately I can’t tell you. We are subject to confidentiality restrictions on that, and we will hope to share further information next quarter.

Okay, thank you.

And your next question is from the line of Hamed Khorsand with BWS Financial. Please go ahead.

Hi. So first question I had was related to your comments around the International segment. Are you seeing actual disconnects related to hospitality right now, or is this just a warning of what could happen if this is a prolonged kind of tourist depression?

Both. I think really, we did see some; I mean most of the strata’s of the condominium complex hospitality there disconnected. Some of those are not as higher profit margins as our residential customers, but we did in the quarter.

And do you have any comment on the situation that’s going on in Guyana? Does that affect any of your business right now in the political realm?

Yes, it feels like more craziness politically in a lot of places, but it’s just an unfortunate situation there. There’s been, as I think we talked about last quarter, contested issues around the election, and the U.S. and U.K. governments and others have questioned it and spoken out quite forcefully about it. The government there has its own position in response to it. It has definitely inhibited some of the activity with the pandemic, and to some extent, the severe oil pipe track that changed in the first quarter, but I would put that as the smallest of factors that has definitely inhibited the sort of more rapid ramp-up of investment and economic activity in Guyana we expected. I still expect it, I think it will come; it’s just hard to look at the math and not see it coming.

Have you changed your business strategy in Guyana? The last couple of quarters, you have been talking about trying to re-strategize the go-to-market strategy, as far as getting new subscribers and growing in the mobile market there?

We have. We are working on that. We are not performing the way we want to in that piece of business. In other areas, we have done quite well. Towards that thing, I think we have made some moves that will be helpful, time will tell, and there is more we are working on. I hate to promise too much there. My view is let’s see it, let’s see actual objectives gains. So we are working on that, and hopefully, it will come.

Lastly, given the delays in construction, do you think you will have any towers in the U.S. for the FirstNet network up anytime in the second half of the year?

I think we are going to. We will have some of it in the later part of the year, yes.

So we definitely will. We are probably a couple of quarters behind where we thought we would be.

You would generate some sort of revenue from that beyond just construction, correct?

We would, we would, but in the meantime, we collect wholesale, roaming revenues on it. So it doesn’t necessarily lead to additional revenue once we flip the tower over.

Okay, understood. Thank you.

And we have a follow-up question from the line of Ric Prentiss with Raymond James. Please go ahead.

Thanks, and my first call ended early so far today, but I wanted to wonder what’s the M&A environment out there looking like? You guys obviously have a large cash balance. COVID-19 kind of whacked us all in the face, but have sellers changed their opinion or is there opportunities out there? What’s the M&A world looking like?

I think it’s early in terms of sellers really changing, except in some businesses that are in real distress, and some of those are not attractive to us either. The other thing that’s still happening; I still see a fair amount of low-cost capital for InfraCo, infra fund type money active in that market that we like, and the types of business models we like. We are increasingly talking to some of those folks and trying to figure out how we work together because there is an opportunity for us to be a real value-added operating and investment partner. So I think that will take a little time, but that’s really where the environment is. It’s not been there has not been some significant reset of values down that I have seen and in some cases may be in the opposite direction because of a flight to safety.

Okay. And also FCC has an upcoming auction in the Rural Digital Opportunity Fund. We won’t talk spectrum since you can’t talk that side of it, but what are your thoughts about that with the RDOF opportunities might be?

I don’t think, Ric, we can talk about that either, other than to say that we are registered.

And what’s the timeline? Is that still October for the auctions to start? Probably can talk to that though?

I believe so. That’s the last I heard was; things have been moving on a couple of fronts, but that’s if my latest understanding is correct then that’s right.

Okay, alright. Good, thanks guys.

Yes.

And I am showing no further questions at this time. I would like to turn the call back to management for closing remarks.

Alright. Thank you, operator, and thanks everybody. I appreciate the well wishes and we extend them to all of you. Thanks.

Take care, everyone.

Ladies and gentlemen, this concludes today’s conference. Thank you for your participation and have a wonderful day. You may all disconnect.