Good day, and thank you for standing by. Welcome to the ATN International Q3 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 first speaker today, Justin Benincasa, CFO. Please go ahead.

Thank you, and good morning, everyone. This morning, we'll review our third quarter 2023 results. I'm joined by Michael Prior, ATN's Chief Executive Officer; and by Brad Martin, our Chief Operating Officer. Michael will provide an update on the business and strategy and a high-level overview of our quarterly results. I'll cover our financials and provide additional context where necessary, and Brad is here for the questions-and-answer session. As a reminder, we released our third quarter results press release yesterday afternoon after the market closed. Investors can find the earnings release and results presentation on our Investor Relations website. Our earnings 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 at atni.com or the 8-K filing provided to the SEC. I'll now turn the call over to Michael for his prepared remarks.

Thank you, Justin. Good morning, everyone, and thank you for joining us. We're pleased with our third quarter performance as we continue to rapidly convert customers to our high-speed networks and work towards completing our 3-year plan at the end of 2024. Let me start by sharing three key takeaways from our performance. First, we continue to execute well on all fronts, delivering higher revenue and EBITDA on solid subscriber growth in both the quarter and the first nine months of 2023. Second, the infrastructure investments we've made in building out our broadband network provide the foundation for strong recurring revenues, durable discretionary cash flow and long-term shareholder value. And third, as we approach the final year of our 3-year plan, we remain committed to managing our balance sheet and spending levels to maximize free cash flow over time. So we launched our ambitious Glass and Steel and First-to-Fiber platform strategy two years ago, accelerating the delivery of high-speed data services to underserved consumers and businesses, primarily in rural areas. Reflecting on our third quarter and year-to-date results in the context of that plan, I'm proud of the financial and operational milestones our team has accomplished towards those objectives. Justin will provide an update on our financial results, but I'll begin with our operating metrics. We achieved robust high-speed broadband subscriber growth of 20% year-on-year, highlighted by strong contributions from our international markets. Additionally, our international markets saw a 13% annual increase in mobile subscribers. In the U.S., we continue to expand our network reach to high-speed data subscribers and to enterprise and government customers. At the same time, we are making progress on rationalizing our legacy network and reducing run rate operating costs. We recently received or were sub-recipients of nearly $45 million in federal grants to connect people in underserved rural and tribal areas to high-speed internet networks. These program grants follow on the more than $155 million in grants awarded to us and our partners over the previous 12 months and will subsidize the funding for fiber and fixed wireless high-speed network expansion in rural areas of the United States, including parts of Alaska, Arizona, Nevada, and New Mexico. The network builds funded by these and potential additional grants are likely to extend over the next several years, paving the way for us to expand our network reach and grow our customer and revenue base, even as the pace of our self-funded capital expenditures decreased as planned. For those of you who are new to ATN, we derive about half of our revenue from customers in the U.S., principally from rural communities in the West and Southwest and both urban and rural areas of Alaska. The other half of our revenue comes from Bermuda and the Caribbean, with a focus on fast-growing markets like Guyana. We're seeing strong mobile subscriber growth and a rapid uptake of high-speed broadband. Based on the positive dynamics and our approach to maximizing the long-term value of our capital investments, we are encouraged about the opportunities across our markets in the quarters and years ahead. ATN is all about high-speed data connections. We play directly into what is unquestionably one of the world's most durable secular growth drivers, the need to be connected anytime and everywhere. The demand for that connectivity at increasingly higher speeds is only going to accelerate. Our network's reliability, consistency, and efficiency provide ATN with an essential competitive advantage and long-lasting assets that will only benefit us as the drive towards greater connectivity continues. And now I'll hand the call back to you, Justin.

Great. Thanks, Michael. As a reminder, all the financials we'll be mentioning during today's call can be found in our accompanying slide presentation that we've added to our website, along with some additional financial tables. ATN's Q3 revenues grew 5% to $191 million, highlighting the steady momentum we've built as a result of our network investments in the past few years. Fixed broadband revenue was the strongest contributor to our top line growth, followed by carrier services and mobility. Moving down the P&L, operating income grew to $6.8 million from $1.4 million in the prior year. Adjusted EBITDA grew 10% to $47.8 million, driven by the strong performance in our domestic businesses. The total net loss for the quarter was $3.6 million or $0.31 per share compared to a net loss of $2.8 million or $0.25 per share in Q3 of 2022. The higher net loss in the quarter was primarily driven by a $5.8 million increase in interest expense offsetting the $5.4 million increase in operating income. Looking at the segment performance for the quarter, the International segment revenues grew 4% to nearly $94 million, while adjusted EBITDA was down slightly to $27.5 million. Operating expenses for the segment were unusually high in the quarter for a number of reasons including the addition of sales support resources that are helping drive the stronger subscriber and revenue growth. We also saw elevated expenses in a few other operating categories, including regulatory fees, and we expect those costs will come down in the coming quarters. For the first time, we exceeded 400,000 international mobile subscribers while also delivering strong high-speed broadband subscriber growth. As I mentioned, subscriber growth was helped by the increased on-the-ground operational support that is capitalizing on the investments we've made to expand and upgrade our network. Mobile churn was up in the quarter as expected, resulting from the wind down of the temporary COVID-related MiFi program supported by the education department in the Virgin Islands. Turning to the Domestic segment, revenues grew 5% or $5 million to $97 million in the quarter. The increase reflected the strong performance of fixed and carrier service revenue growth, driven by increased enterprise and emergency connectivity fund revenue in Alaska and by the acquisition of Sacred Wind. As expected, this was slightly offset by a reduction in legacy roaming and construction revenues. Adjusted EBITDA in the segment rose 22% or nearly $5 million to $26.9 million. The strong EBITDA performance was driven by higher revenues and several ongoing cost reduction initiatives. As we mentioned in the last two quarters, ATN is focused on rightsizing the cost structure necessary to support the business into the future and improve overall operating margins. As a result, we recorded a $1.4 million restructuring cost in the quarter and $4.6 million year-to-date, reflecting mainly costs associated with decommissioning networks and reduction in force expenses. We expect the majority of our operational review to be complete in the fourth quarter and do not anticipate any further restructuring costs into 2024. Looking now at capital expenditures, year-to-date, through September 30, we invested $126.6 million, net of $14.3 million in reimbursable costs, consistent with our Glass and Steel and First-to-Fiber strategies. We're on track to be within our 2023 CapEx guidance for spending between $160 million and $170 million. Within the U.S. segment, CapEx spending during Q3 was $18.4 million, primarily related to fiber expansion in Alaska and the Lower 48. Internationally, CapEx spending was $18.7 million in Q3, which focused on the continuing fiber deployment in Guyana. In our earnings news release issued yesterday afternoon, we provided preliminary full year 2024 outlook. Our preliminary '24 adjusted EBITDA outlook anticipates a range of between $200 million to $208 million and our preliminary CapEx spending outlook anticipates a range of $120 million to $130 million. The increase in adjusted EBITDA, combined with the slower pace in our network investments, will increase free cash flow as we move into 2024. Consistent with past guidance, our CapEx guidance is net of reimbursable expenses. While ATN is slowing down its rate of capital expenditures going into 2024, we expect the grants we received and expect to receive will further expand our network investments and ultimately extend our network reach and revenue potential. Turning to other balance sheet and cash flow highlights, we ended the quarter with cash and cash equivalents of $73 million and net cash provided by operating activities was $89.5 million year-to-date. At the end of the third quarter, our total debt outstanding was $498 million and our consolidated net debt to adjusted EBITDA ratio remained at 2.3x. As we move into 2024 and expand free cash, we expect to maintain a healthy leverage ratio and financial flexibility. With that, I'll hand it back to Michael.

Thank you, Justin. Our performance across both the broadband and mobile areas of our business has us in a good place as we look towards the final quarter of 2023 and beyond. I'm excited about the opportunities in front of us. As planned, our Glass and Steel and First-to-Fiber strategies have contributed to our recurring revenue and adjusted EBITDA growth. As we move closer to 2024, we are focused on executing on the opportunity we have developed, expanding free cash flow as we come down the other side of the investment bell-curve and growing subscribers and revenue at higher incremental unit margins, which should expand our operating margins and magnify the benefit of the normalizing capital spend levels. We expect the fiber investments in particular to have a long tail, delivering sustained strong operating cash flows for years to come. And now I'll turn it back to you, operator, to open the line for questions.

Our first question will come from Ric Prentiss with Raymond James.

A couple of questions. First, appreciate the preliminary 2024 guidance; it always helps. Help us understand what your level of visibility is in giving that? And what the positives and negatives are as far as what you're excited about and what you're concerned about.

To answer the last part first, I mean, I think we feel pretty good about that, and it is preliminary, but I think we feel we will be given a relatively tight range if we didn't feel pretty good about landing in that area. The positives and negatives are that we have a huge portion of our revenue that is recurring, with not a lot of volatility. So the positives and negatives are kind of smaller things. One example is we have a contract that we know about that's COVID-related, a $27 million annual contract in the U.S. that is set to expire at the end of the first quarter. We've taken that into account, and that would be on the negative side. On the positive side, we're pretty confident in the continued subscriber growth and continued organic revenue growth rates in light of it. I would say it's fairly balanced in terms of our expectations on that, but not overly optimistic by any means.

Okay. Speaking of revenue, you guys don't provide revenue guidance. Any thoughts on why that is? Is it just that you're managing towards the margin, with different businesses having different profiles? Or are you just wondering about when revenue guidance might be made available, especially since so much is recurring?

Yes, we didn't provide revenue guidance because there are more variables at play. It's a lot easier to focus on EBITDA, which leads to CapEx, and which leads us to the most important number, which is free cash flow. So we're really focused there. But as I said, other than that one example I gave, I think you can kind of expect revenue growth at similar rates than what we've been experiencing.

And that $27 million COVID-related contract was in the U.S.?

Yes, that's an annual rate. So three-quarters of that will fall away next year.

And obviously, we really do like free cash flow. Justin, you mentioned healthy leverage. Where do we think you want to run leverage at over the mid- to long-term versus the 2.3x where you're at?

Our goal is to still get leverage down to around the 2x range. Some of that's going to be driven by free cash flow, and some can be driven by just growth in EBITDA. But our long-term goal is to keep driving it down from the 2.3x level towards closer to 2x.

Financial flexibility seems to tee up a lot of shareholder returns. How should we think about your plans for stock buybacks or dividends as we think about where financial flexibility might go or potential M&A?

I think we're primarily focused on returning value to shareholders rather than M&A. We've been investing a lot in the business, and it's time to deliver on that. I think concerning stock buybacks, through September 30, we were at nearly $12 million this year, and that leaves us with around $7.5 million left in the existing program. Typically, around December, and sometimes at other times, the Board will evaluate those sorts of capital allocation decisions, including dividends, buybacks, and the rest.

This question comes from Hamed Khorsand with BWS Financial. We will now move to another question from Greg Burns with Sidoti.

I just had a couple of questions about the segment margins. First, on the international side, that increase in spending you saw this quarter. It sounded like some was unusual while some was perhaps structurally higher spending to drive growth. Could you just break those apart and what kind of expectations do you have for margin expansion from here? Or is this a good level to think about for the business going forward?

We are expecting margins to expand, but maybe Brad, I'll let you give a little more color on international.

From a margin expansion perspective, we'll continue to grow margins by continually adding subscribers and revenue on our existing fixed cost-based assets that we've been investing in, while also continuing the decommissioning of legacy networks.

And I think just to address your inquiry on the most recent quarter, some of it was related to the sales side, but some expenses including regulatory fees were elevated, and we're focused on bringing those costs down.

Okay. And I think CapEx was closer to $70 million, $80 million annually before I guess you embarked on the current fiber initiatives. Is that a good level to think of for more steady-state maintenance or run-rate CapEx once we get past 2024? How should we think about where CapEx is going to be headed over the next couple of years?

Yes. I think we think of it in terms of a percentage of revenue. We’ve been running well above 15%, which is sort of the top end of the normal range in recent years as we've been on these programs. We expect it to start moving into that range and down from there. I'm not trying to provide a specific number for 2025 at this time, but that is the direction we're looking at. Typically, in our experience across many markets, after a period of excess spending, our CapEx levels usually come down to around 10% or below that for a while. Also, part of our belief in fiber investment is that it has lower maintenance costs alongside a long, technologically useful life in the business. Thus, the fundamentals of what we’re investing in should encourage us to move down to the lower end of that range without giving a specific number.

Yes. Just to clarify, too, Greg, I think your $70 million, $80 million was probably somewhat before Alaska.

Our next question is from Hamed Khorsand with BWS Financial.

I know something must be wrong there, operator.

Yes, you may need to unmute Hamed, or we can try someone else. Thank you.

Yes. We'll have to come back to him, I guess, if we get that fixed.

So we have another question from Ric Prentiss with Raymond James.

Just open air time; I'll take it.

We can't have dead airtime. You know that, right?

Exactly, exactly. Can you hear me now? The follow-up questions I had is, first, a lot of interest in the industry about fixed wireless high-speed Internet. How do you all think about your markets domestically and internationally in terms of capacity to offer fixed wireless? Is there interest out there? Can it reduce churn? Just share your thoughts on fixed wireless, and I have one more follow-up.

Yes, I think it's absolutely part of the mix in all our markets really. And it varies. In an area like Bermuda, it's a very limited part of the mix as it's fairly densely populated. We've got high-speed connections to virtually every home. Even in parts of Cayman, we are bringing fiber towers and using fixed wireless solutions because the economics are better; it's typically used in less populated areas, where we have good enough spectrum or technology, to deliver high capacity to each user. We’ve been working with technologies that have really improved the customer experience across the board. And in the U.S., we tend to bring fiber to the towns, and then bring fiber to the towers into the businesses. For those living in the hills, ranches, or similar areas, we connect them typically through a fixed wireless solution. We have a number of areas where we have a fair amount of capacity on our fixed wireless network that we expect to load subscribers on in the coming quarters.

Okay. The other question is, one of the topics has recently been direct-to-device satellite connectivity into smartphones. You guys have had some views into the satellite world, but what are your thoughts on where direct-to-device plays out and what role it could play in your offerings?

I think it's going to be great. It's a valuable tool and a great functionality. As an operator, that's the functionality we would like to deliver to our customers. While we're not a mobile operator, I think it's beneficial for our customer base, especially in remote areas. It's probably a good tool for some of our workers who are outside. I think it’s here to stay. The actual usage scale is a different question, but in terms of available functionality, I believe people will want it once they experience it.

No, fully agree. This technology will continue to evolve, and we definitely see a great use case for it.

It seems like the ecosystem really needs to align; the chipset, satellite operators, the chipset, the phone, and the operators must work together. Would you say that's a fair outlook?

I don't know if I know enough to speak conclusively on that. I do think collaboration is needed. We were involved in XCom, which did that globally, and it's working with Apple. So there are other providers who are doing this as well. It seems that a multi-faceted approach is necessary.

Any further questions, operator? I'm showing no further questions at this point, so I'd like to now turn it back to Michael Prior for closing remarks.

Thank you all for joining us on the third quarter call. It was a good one.

Take care, everybody.

Thank you for participating in today's conference. This concludes the program. You may now disconnect.