Good day, and thank you for standing by. Welcome to the ATN International First Quarter 2023 Earnings Conference Call and Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Justin Benincasa, Chief Financial Officer. Please go ahead.

Great. Thank you, operator, and good morning, everyone. Today, we will review our first quarter 2023 results. With me here is Michael Prior, ATN's Chief Executive Officer. Michael will provide an update on our business and strategy as well as a high-level overview of our quarterly results. I'll then cover our financials and provide additional color where necessary. As a reminder, we released our first quarter results press release last night after market closed. Investors can find the release and results presented for this call on our Investor Relations website. Before I turn the call over to Michael, I'd like to point out that this call, our press release, and the presentation contain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operating results. These statements 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 future operating results, please refer to our earnings release on our website. I'll now turn the call over to Michael for his prepared remarks.

Thank you, Justin, and thank you for joining us, everyone. I would like to start the call today with three key takeaways from our Q1 performance. One, our strategy is working and is driving growth in subscribers and footprint or addressable market; two, adjusted EBITDA performance is improving in line with subscriber and revenue growth; and three, our three-year outlook, as announced at the beginning of 2022, is tracking to plan. We expect revenue and EBITDA growth to ramp to bring us in line with the three-year CAGRs we have forecast. At ATN, our central purpose is to provide connectivity for all. In doing so, we improve lives and communities and deliver lasting value for all our stakeholders. We go where the need is and where most of the larger telecommunications companies prefer not to go. To date, that includes the Caribbean, the rural and tribal lands of the U.S. Southwest and Alaska. Today, we are in the process of advancing initiatives to secure our vision and long-term growth. We call these strategic initiatives 'glass and steel' and 'first to fiber.' They are core to our strategic three-year plan, which I first outlined at the beginning of 2022. It is a plan with the intention of building a highly resilient customer base and average revenue per user, or ARPU, on the tail of relatively short-term increases in capital expenditures. To accomplish our goals, we are currently investing in quality assets to expand our strong market position, which should bode well for the consistency of future cash flows. Internationally, we are investing in our 'first to fiber' strategic initiative to expand our market leadership. Through this strategy, we are bringing fiber-rich digital infrastructure to the Caribbean, expanding our network reach in growing markets like Cayman and Guyana, and continually improving and strengthening our network and services in places like Bermuda and the U.S. Virgin Islands. These actions are providing us with several new growth levers and cash flow generators while at the same time reducing the risk of customer churn. Domestically, in our fiber expansion, we continued to all segments: business, carrier wholesale, and retail. And the team is accomplishing that while also working to improve operating efficiency and margins. In the Lower 48, our glass and steel strategic initiatives are capitalizing on the changing needs of our wholesale mobile carrier customers to complement an effort to fill in the fiber and other connectivity gaps in the rural areas of the Southwestern and Western United States. The FirstNet contract with AT&T was the first pillar of this strategy, and we expect to enter into a similar arrangement with another national carrier in the current quarter. These partnerships with the national mobile carriers are a testament to our strong and reliable offerings, scalability, deep and broad local operating capabilities, and brand reputation. As important, we are expanding our business and retail broadband operations in the region using government grants and anchor tenants, wholesale or government customers to expand our high-speed network and fixed-line revenues. As we discussed last quarter, the addition of Sacred Wind was intended to boost this effort. The early evidence is very positive with the team meshing well with their new colleagues and hitting the ground running with some key early wins on new subsidized fiber builds and customer growth. The first quarter of 2023 marks the start of the second year of our three-year investment plan. We are already seeing the benefits of our expanded network and its associated customer additions. ATN's first quarter revenue reached the highest level in over a decade. This quarter, we showed consistency of execution and were again rewarded with high levels of customer retention and progress on our key operational and financial metrics. We expect our customer revenue and adjusted EBITDA growth trends to continue throughout 2023. We're also working on augmenting this growth through improvements of the cost structure of several operations, such as by accelerating the removal of legacy network and operating costs. In total, we are enthusiastic about the durability of our revenue, our financial flexibility, and our long-term growth prospects. We continue to track to our three-year plan. And to illustrate our progress in the quarter, we grew the homes passed by our broadband networks to about 736,000 at the end of the quarter, which was 21% higher than a year ago. This includes an additional 108,000 passed by fiber or other higher-speed solutions. Our ongoing network investments also are reflected in our subscriber levels. As of March 31, 2023, 55% of our more than 216,000 broadband subscribers were connected to our fiber or other higher-speed networks, representing growth of nearly 18% year-over-year in high-speed data subscribers. We ended the quarter with more than 328,000 mobile subscribers in our international segment, and this is up 13% from a year ago, reflecting the success of our sales and marketing efforts and investments. As Justin will discuss, we saw positive results across both of our operating segments, including a strong performance in Alaska, fiber and broadband customer additions that I've just mentioned, and of course, the mobile subscriber growth. Both in the Caribbean and in the U.S., most of our expansion work is in markets that we believe will continue to benefit from growing demand and positive secular tailwinds, putting us in an excellent position to benefit from this growth as we provide these communities with the connectivity capabilities that will help them thrive. An example of this work is our Via subsidiary in the U.S. Virgin Islands. We were just awarded a contract to bring high-speed fiber-based connectivity to all public schools in the territory. The project is 100% fiber-based, delivering the fastest speeds and including an inter-island fiber link between the two Department of Education network operation centers, providing a critical additional layer of resilience for the school's connections. Notably, this public-private initiative ensures that the territory benefits from a more digitized teaching and learning experience as it helps schools and libraries obtain affordable Internet access and telecommunication services. In summary, we remain committed to providing connectivity for all. We are working to be first to fiber in those markets that are aligned with our established criteria and where we believe we can also develop strong first-mover advantages. In addition, we continue to prioritize building and owning modern core digital communications infrastructure, consistent with our glass and steel strategy. Most importantly, as we execute towards these two strategic objectives underpinning our three-year plan, we are also steadily expanding our overall broadband network and subscriber count. In turn, this should generate revenue growth with higher incremental operating margins, giving us confidence in our long-term growth targets as well as our core financial objectives for this year. As Justin will expand upon momentarily, our financial position enables us to be flexible in the execution of our strategies as we look to maximize value for stakeholders. And with that, I'll hand the call back over to you, Justin.

Great. Thanks, Michael. With much focus these days on the financial climate, inclusive of interest rates and access to capital, let me start by sharing a few words on our capital allocation strategy and how we expect the moves we're making today to expand ATN's success now and in the years ahead. ATN is in a strong competitive position given our solid balance sheet to make strategic investments in advanced connectivity as we set out to do last year. Our operations generate significant cash flow that provides ample liquidity to support continued investment in advancing our growth initiatives that Michael talked about earlier. We have a disciplined and balanced capital allocation strategy that we'll continue to adapt as we deploy capital to reward stockholders, including our quarterly dividends, organic investments to help secure future growth, and our share buyback program. In addition, we'll work to maintain financial flexibility, allowing us to remain opportunistic in making investments that can accelerate or enhance our strategy and returns. All in, our plan works to better serve customers by establishing a first-to-market advantage, which in turn will provide durable financial results for years to come. This is a playbook we've deployed successfully in the past. We anticipate that a temporarily heavy capital investment cycle will be followed by a substantial increase in monthly recurring revenues and free cash flow. Turning to our results for the quarter, total consolidated revenues increased 8% as you can see in our accompanying slide presentation that we've added to our website along with some additional financial tables. Operating income improved $0.6 million from $0.1 million a year ago. Adjusted EBITDA was up 6% year-over-year. These improvements were primarily driven by continued strength in the international segment, steady results in the domestic business as we benefit from the investments we've made in network expansion upgrades totaling more than $200 million over the prior two years as well as from the Sacred Wind acquisition, which closed in November of 2022. Turning now to our segment breakdown. In our international segment, revenues rose 4% in the quarter and adjusted EBITDA was up 5%. This increase was the product of continued growth in broadband and mobile subscribers and the associated revenue, partially offset by the previously announced step down in federal high-cost support subsidies for the U.S. Virgin Islands. Our strength internationally continues to be driven by superior customer support and great execution by the local teams to increase high-speed data subscriber counts and ARPU. We also see continued positive growth in our mobile subscriber base and revenues as the result of strong sales and marketing efforts following our substantial network upgrades and expansions. While these marketing and sales efforts are delivering benefits, we are aware that overall expenses have room for improvement, and we'll continue to monitor and make the necessary moves to balance subscriber and revenue growth and margins in this climate. In our U.S. segment, revenues were up 12% in the quarter. Of note, our Alaskan operations continued to perform well, producing a substantial top line contribution and strong operating cash flows. During the period, business and carrier services accounted for approximately 74% of the segment service revenues mainly reflecting higher revenue performance from Alaska. This was partially offset by an expected reduction in legacy wholesale wireless revenue as we continue to reposition the Lower 48 business around the glass and steel strategy and carrier-managed service contracts that provide stable long-term recurring revenue. As part of our effort to reposition this business, we conducted a review of all the sites that were supporting our legacy roaming network. This review was aimed at determining what was necessary to support the business in the future. As a result, we recorded a restructuring charge of $2.9 million in Q1 to exit sites that were no longer needed. Construction revenues, which aligned with the number of FirstNet sites completed in a given quarter and roughly equivalent to construction costs, were also lower year-on-year. We expect to substantially complete the construction project in 2023 with a small number of studies being completed in early '24. Based on the schedule today, we estimate the construction revenue will be in the range of $12 million to $14 million, with approximately 70% to 75% of that revenue coming in the second half of 2023. Overall, for the U.S. segment, adjusted EBITDA was up 16% year-on-year, mainly due to the contribution of our expansion in Alaska and the Sacred Wind acquisition. ATN's total net loss for the quarter increased to $5.9 million or a loss of $0.44 per share, mainly due to a $5.4 million increase in interest expense over last year. We reported core CapEx for the quarter of $50.6 million, which includes $29.1 million to our U.S. segment and $21.5 million for our international segment. Higher CapEx spending in the U.S. includes investments in fiber builds in Alaska, infrastructure to support FirstNet, and modest additional costs following the Sacred Wind acquisition. International segment spending largely includes the continued fiber deployment in Guyana and mobile network investments. In line with our previously announced guidance, we expect a slower CapEx spend for the rest of the year compared to our first quarter pacing. Now turning to our balance sheet and cash flows. We ended the quarter with cash and cash equivalents of $56 million. Net cash provided by operating activities was $16 million. In the quarter, we used approximately $27 million of cash to fund various working capital items, including the reduction in CapEx payables and accrued balances. At the end of the first quarter, our total debt outstanding was $465 million, including $30.3 million in debt from the Sacred Wind acquisition and $249.1 million on Alaska Communications' balance sheet. This figure excludes the $48.1 million related to the FirstNet customer receivable financing facility. With a consolidated net debt to adjusted EBITDA ratio of 2.3x, we're continuing to maintain our strong balance sheet as well as the flexibility needed to execute our fiber build strategy. Before we turn to our guidance, I want to note that as we shared last quarter, we've changed how we report our adjusted EBITDA beginning in 2023 to be in line with most of our peers. We're excluding noncash stock-based compensation and have provided a pro forma reconciliation table in our earnings release. For the first quarter of 2023, stock-based compensation was $1.8 million compared with $1.5 million in the same period last year. As detailed in our news release, our longer-term outlook continues to track the plan. For 2023, our guidance remains the same with adjusted EBITDA in the range of $183 million to $193 million for the full year, with somewhat more of that year-on-year growth expected in the second half of the year. Capital expenditures are estimated to be in the range of $160 million to $170 million, net of reimbursed amounts primarily for network expansion and upgrades, which are expected to further drive subscriber revenue growth in the following periods. In summary, we delivered solid financial results aligned to our plan, which we expect will yield durable recurring revenues and cash flow growth. We're benefiting from our established leadership across our markets as well as from our ongoing network expansion, network improvements, and growth in our subscriber base. As we invest in accordance with our three-year plan, we're also building out our foundation and setting ATN up well for the long term. We look forward to continuing delivering value to all our stakeholders across our operations and updating everyone on our progress going forward. And with that, I'll turn it back over to Michael for his remarks.

Thank you, Justin. ATN continued to execute at a high level this quarter with steady momentum across our markets. Strategically, our market approach enables ATN to deliver a strong product suite to customers and to secure our market leadership by growing subscribers and revenue and reducing churn. Being the first to provide a community with true high-speed connectivity creates a unique opportunity to generate customer loyalty and build a strong base of revenue across all sectors: consumer, business, and government, which in turn enhances operating cash flows and generates strong returns for our stakeholders. Looking ahead, we will continue to serve our customers well, advance our strategic broadband build-outs, and make progress toward our three-year growth objectives. With that operator, I'll hand it back to you to open up for questions, please.

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

I want to begin by discussing FirstNet. In my notes from the year-end call, you mentioned you would be nearing completion on FirstNet this year, and it seems that is still the case. I wasn’t aware there could be $27 million in revenue, with $23 million coming from two-thirds of the back half. How does that align with your previous statement about $12 million to $14 million? Also, what is the current percentage of completion as we try to keep track of this? I know this is a low-margin product.

Yes. It was initially projected to be in that range. However, some of that will now extend into 2024, and some site construction may be eliminated. Therefore, we are adjusting the number down to between 12 and 14, with the expectation that the majority will be in the second half of the year.

Right, right. So the total contract, which again is low margin, might be less than that $85 million. I think I've written that way back on.

That is correct.

Okay. Can you help us understand what percentage you are currently complete? Is it difficult to determine?

Yes, it's about 75% complete today.

Okay. And obviously, that is excluded from the guidance because the long-term guidance talks about ex construction. How about Sacred Wind? Is Sacred Wind included in that guidance because clearly Sacred Wind was not there in '21? It was additive modestly in '22. It was in the first quarter. So as a secret one on top of that guidance? Or is it kind of rolled into it then?

It gets rolled into it.

Okay. And I think I remember Sacred Wind might have been bringing about $10 million of annual EBITDA. Is that fair?

We did something like that last year.

And any reason to think that would go down instead of us as you look to spend capital there?

No, but it's really a full integration. So we don't really look at it that way. I mean it's already sort of obscured. But I mean, if you're trying to ascertain kind of what it brings in as it comes in, that's about right.

Okay. And then the revenues were never disclosed, but it looks like the margins might be in that 15% plus range kind of ballpark just given before integrating and adding it into the rest of the company?

Yes, it's higher margin than the business it's going into. That's correct.

Sure. Okay. Stepping back away from it. You mentioned you might be pursuing and might have a similar contract to FirstNet with a second carrier. So is the second net going to be similar low-margin contract to get stuff out there and you get some other business offer? Or how should we think about what this second contract would be?

Yes, we are definitely not going to call it that. We'll talk more about it when it actually gets finalized. But just to give you an idea of the way of thinking about it, it's really that the margins from the project itself are positive. The returns are positive. It looks attractive to us to do. More importantly, as we move past completing most of the old business, it allows us to focus on optimizing our operations going forward. Currently, we are managing two cost structures simultaneously, which is the primary advantage we observe. This situation also provides a solid foundation for long-term recurring revenue as we continue to expand fixed broadband revenue in the region.

Okay. That would also be kind of a construction project that would be outside of guidance, I assume.

Again, I think we'll talk more about it when there are details on the contract. I think it will be different in structure and P&L impact on FirstNet.

Okay. Last one for me. I look in private valuations have remained diverse somewhat. Can you talk about what you're seeing in the marketplace as far as public versus private valuations and any M&A thoughts on your side as far as anything that might be interesting to buy or interesting to sell?

Yes, we observe a similar trend. Numerous deals are still being completed by infrastructure funds and traditional private equity funds in this sector. They typically achieve multiples that significantly exceed our valuation and that of other public companies. This situation makes it more challenging for us to engage in bolt-on acquisitions. However, it also validates the value we've been creating because when we review some of the businesses that are being acquired, we feel confident in our infrastructure, our growth trajectory, and our market position, which we consider to be much stronger. So I think we will continue to look at things. We always consider things if they come in through a process, but it's just not a core focus for us right now. We're really focused on executing this plan.

Our next question is going to be from the line of Greg Burns with Sidoti.

I understand you're projecting a decrease in CapEx to the 10% to 15% range after '24. How should we consider next year? Will CapEx reduce towards that level next year, or will it remain at the elevated levels we are seeing this year, with a more significant decrease occurring in '24?

I think it's more significant in '24, but I think it would probably tend to step down a bit next year as well on its way to a lower level than '24.

What is your market share in international wireless growth across some of your markets? I'm trying to understand the growth opportunity there. Are you gaining market share from specific competitors in any markets, or is it mostly new growth?

Yes. We don't provide market share statistics, so I won't share that now, but I can address the second part of your question. We are gaining market share. I would say that most of our subscriber growth thus far is due to taking share rather than overall market growth.

Okay. And then lastly, regarding the domestic wireless business, with the new managed services contract, will the wholesale wireless component of your revenue go to zero or trend towards zero? Are we transitioning all that revenue into long-term managed service contracts after this deal, or is most of that revenue still intact?

It's really what we call carrier service revenue. So already, those roaming contracts appear under that line in carrier services revenues that this would appear in the same line. I just going to say, but generally, yes, they are replacing that wholesale roaming.

Our next question comes from the line of Hamed Khorsand with BWS Financial.

A follow-up on this to be announced contract. What kind of preparations are you taking as far as the roaming business is concerned with the towers? And are there going to be more charges in Q2 as if you need to take towers offline? How would that work on the cost line?

I believe we have accounted for the charges we expected, and they are largely reflected in our current actions. We will continue to utilize our towers, although there will be some new tower sites we won't use; overall, most will be reused.

Okay. And then on the Alaska side, is there any seasonality in the business that you're seeing this year as far as the fiber build goes and adding on new customers?

There's not a lot of seasonality in that business. I mean, there are definitely quarters. I mean, their numbers are big. So there are quarters that tend to come in larger than others. But generally, it's fairly straightforward. I mean, it could be for something that got delivered in the quarter as opposed to seasonality, I would say, more. There is probably a flight from the residential fiber business. It's a little easier to sell and be active in the second and third quarter builds also can tend to be easier to execute then, although we do both all year round.

And then on the fiber build in Alaska, are you primarily focused on residential? Or are you seeing demand from commercial?

We are continuing to expand our fiber to towers and developing longer routes for government customers. However, a significant portion of our expansion and capital expenditures has been focused on the residential sector.

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

We've got a few more in. Following up on Hong's question on the sites that you reviewed and have taken a charge. How many sites are you left with? Are we kind of like in the 500 site range? Are we below the 500 site range, above 500 sites? How many sites are left?

I won't provide a specific number, but I want to clarify that a significant portion of the restructuring costs are operating costs. This includes aspects of the business, such as personnel that support various functions. While some of the costs relate to sites, others involve employees as well. Overall, it is not significant to our total tower count.

But can you give us a bread basket size about how many you've got? Because also, we've always wondered why couldn't or wouldn't you maybe put a debt financing on the towers or position them for potential sales someday depending on where things like.

Yes. We own a couple of hundred towers, including some sites that we still prepare as part of that. However, we did reduce our number by about 70 sites during the restructuring.

But a lot of that is emphasized as third-party side.

Yes, third-party sites, right? Yes. Anything we own, we still value the asset and are using it.

I'm showing no further questions, and I would like to turn the conference back over to Justin Benincasa for any further remarks.

Actually, I'll take it this as for Michael Prior, so thank you, operator, and thank you all for joining us this morning. We're excited about the future, given the essential nature of our offerings, the expansion of our network, our first-mover advantages in underserved communities and the financial flexibility we have within our control.

Thank you, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.