Good day, and thank you for standing by. Welcome to the ATN International Q1 2024 Earnings Conference Call and Webcast. Please be advised that today's conference is being recorded.

Thank you, operator, and good morning, everyone. I'm joined today by Brad Martin, ATN's Chief Executive Officer; and Carlos Doglioli, ATN's Chief Financial Officer. This morning, we'll be reviewing our first quarter 2024 results and providing additional insights on the 2024 outlook. As a reminder, we announced our 2024 first quarter results yesterday afternoon after the market closed. Investors can find the earnings release and conference call slide presentation on our Investor Relations website. Our earnings release and the presentation contain certain forward-looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operations. 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 for 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. And now, I'll turn the call over to Brad.

Thank you, Michele. Good morning, everyone, and thank you for joining us. The ATN team remains focused on advancing our First-to-Fiber and Glass & Steel strategies to enhance our fiber-rich digital infrastructure and next-generation fixed wireless capability, positioning ATN to capture the growing demand for high-quality broadband in the remote and rural markets that we serve. Although we saw growth in key operational metrics year-over-year resulting from the strategy, our first quarter financial results were softer than expected. I'll begin by briefly covering the dynamics from our first quarter and a revised outlook for the year. Then, I'll outline our progress executing our strategy before turning the call over to Carlos to review our first quarter financials and revised 2024 guidance in more detail. Starting with our first quarter results. Our first quarter revenue was up 1% and adjusted EBITDA was down 3% versus the prior year quarter. Our U.S. telecom segment performance was impacted by delays in major carrier services projects and weaker than expected business revenue. These dynamics impacted our domestic segment's first quarter results and full-year outlook. The U.S. shortfall was partially offset by solid performance in our International segment where revenue and adjusted EBITDA grew 3% respectively as we grew high-speed broadband services and business customer revenue. Today, we are lowering our guidance to reflect the softer-than-expected first-quarter results as well as our current expectations for the balance of the year which has been impacted primarily by two factors. First, while now we have line of sight to the U.S. carrier services projects moving ahead, the delayed delivery timing will result in some of the previously forecasted revenue moving out of 2024. Secondly, we secured fewer new business contracts for major government programs in the first quarter. We expected a higher win rate and we expected these contracts would help offset the step down in the emergency connectivity fund program that expired at the end of the first quarter, as we have previously signaled. In response to these dynamics, we are sharpening our focus on managing operating and capital costs, which Carlos will speak to further in his remarks. Additionally, we are accelerating our efforts to bring in revenue opportunities in the second half of the year. We built a strong sales pipeline and believe our expanded and upgraded network positions us to convert these opportunities. Additionally, we recently brought in several key leadership hires that add further telecom and operational expertise to the team. This includes several new operational leaders and new commercial leadership in our domestic markets. These talented additions further reinforce our ability to convert growth opportunities and efficiently operate our business. Now turning to strategic and operational updates. We remain focused on our First-to-Fiber and Glass & Steel strategies to strengthen ATN's market position and enable ATN to grow high-speed data subscribers, increase recurring revenues, expand free cash flow, and deliver value creation for our shareholders for years to come. The future of telecommunications is high-speed data connections and gigabit cloud solutions, whether through fiber or fixed wireless. This is why for the past two years we have been investing in the enhancement of our high-speed networks' reach and capabilities above historical CapEx levels. These investments have continued to yield growth across several key operational metrics. Notably, at the end of the first quarter, we've increased broadband homes passed by high-speed data by 28% and grew high-speed broadband customers by 12% when compared to a year ago period. We also continue to maintain high levels of customer retention. Replacing and decommissioning legacy copper networks with fiber networks remains a key strategy as well. Fiber's many advantages position ATN to deliver high margins over time. We exited the first quarter with 1,692 fiber route miles, a 5% year-over-year increase. We also increased our fiber homes passed footprint by 19%. Now taking a closer look at operational highlights by segment. Starting with our International segment, which represents about half of ATN's revenue. Across this segment, we continue to see a rapid uptake of high-speed broadband with high-speed data subscriber growth of 11% year-over-year. Another bright spot and area that we have targeted for growth is revenue for international business which is up approximately 13% year-over-year. Turning to our U.S. segment, which accounts for the other half of ATN's revenue. In the U.S., we're focused on building out our digital infrastructure to support the evolving needs of our carrier customers, while also expanding our fiber network to bring fiber-fed high-speed data services to underserved rural markets. Although we experienced some delays in major carrier services projects in the first quarter, we continue to achieve several important operational milestones in our U.S. markets. At the close of the first quarter, we increased broadband homes passed by high-speed data by 75% year-over-year to over 131,000 homes. This expanded footprint represents an opportunity for ATN as we focus on leveraging our assets to increase market penetration and grow our business. Moving on to an update on grant funding. In the U.S., grant funding remains key to our strategy. While no new grants were awarded in the first quarter, we continue to work off past grants awarded. Since the start of 2023, ATN and our partners have secured a total of $91 million in grants and subsidy funding in the U.S. on top of the $155 million for the 2022 year. These funds will support our continued expansion and customer and revenue growth even as the pace of our self-funded capital expenditures decrease as planned. Regarding BEAD, although some states have delayed their planning, we remain ready and well-positioned to compete for funding as opportunities come to fruition in our operating states. And finally, we want to comment on the Affordable Connectivity Program. Our exposure to ACP remains minimal at approximately 15,000 subscribers, and we continue to take action on mitigation plans. Like others in the industry, we experienced earlier than anticipated shifts in customer purchasing decisions ahead of the program's expiration. The impact is expected to be minimal to ATN's revenue and net neutral on our profitability, dynamics that are reflected in our revised guidance. Before turning the call over to Carlos, I want to reiterate our priorities for 2024, which include accelerating efforts to close incremental revenue opportunities in the pipeline that leverage our expanded and upgraded network; growing our high-speed network subscriber base, and further expanding our fiber footprint through targeted internally funded investments, albeit at a reduced level; leveraging the grants we have already been awarded while pursuing further economically viable grant funding to augment internal investments in the future; advancing margin improvement initiatives along with executing a broad range of cost reduction actions to align our cost structure and improve operating leverage. And finally, prudently managing our balance sheet with the goal of lowering our leverage over time. And with that, I'll hand the call over to you, Carlos.

Thank you, Brad. Good morning, everyone. As Brad previewed, our first quarter results came in below our expectations. Given the first quarter's performance and our current assessment of market dynamics, we are focused on strengthening our business revenue pipeline and accelerating several cost reduction actions. Today, we're revising our full-year guidance, which I will expand upon in a moment. Turning now to a detailed review of our results, starting with the income statement. In Q1, total company revenue of $186.8 million was up 1% compared with the same period in 2023. Excluding construction revenues, service revenues were flat. There were several factors in the quarter. Across the company, we experienced growth in fixed revenues, which were partially offset by declines in mobility and carrier services revenue. The primary offset to growth related to the delayed delivery of several carrier services projects and soft business revenues in our U.S. telecom segment. Operating income in the first quarter was $4.6 million versus $0.6 million in Q1 of 2023. The increase was due to lower restructuring expenses and reduced depreciation and amortization expenses compared with the prior year. Net loss in Q1 was $6.3 million for a loss of $0.50 per share, which included $1.2 million of restructuring expenses, a $2.5 million year-over-year increase in interest expense, and $1.6 million in tax expenses versus a benefit in last year's first quarter. This compares with the prior year's net loss of $5.9 million for a loss of $0.44 per share, which included $2.9 million of restructuring expenses. Adjusted EBITDA for the first quarter was $43.5 million, down 3% from the year ago period, primarily due to a $1.3 million increase in the cost of services. Looking now at the segment's performance. Beginning with our International segment, revenues reached $93.1 million at 3% year-over-year. Our International segment saw strong year-over-year high-speed data subscriber growth, resulting from our network upgrade and expansion efforts that drove increased fixed broadband revenues at 4%. This more than offset some softness in the voice portion of mobility revenues. Notably, we're seeing strong demand for data mobile subscriptions. Solid revenue growth and the benefits of the restructuring efforts taken in 2023 led to adjusted EBITDA of $29.3 million, an increase of 3% in the quarter. We expect to see further benefits from the additional restructuring efforts taken in Q1 and other cost reduction efforts throughout 2024. In our domestic segment, as I mentioned earlier, Q1 revenues were $93.7 million, down 2% year-over-year, due to the delays in carrier services projects and slow business growth. Adjusted EBITDA for the domestic segment was $20.7 million, down 9% compared with the prior year. This was due to the lack of revenue growth and higher cost of services in the quarter. Moving on to the balance sheet and capital highlights. We ended the quarter with a net debt-to-adjusted EBITDA ratio of 2.5x, on total debt outstanding of $541 million. Net cash provided by operating activities in Q1 was $23.2 million, up from $16 million in the prior year period, driven primarily by an improvement in working capital. Our plan remains to strengthen our balance sheet and continue to expand cash flows. Moving now to capital expenditures. Q1 CapEx was $36 million, net of $13.5 million of reimbursable capital expenditures. This compares to $50.6 million, net of $2.1 million in reimbursable capital expenditures in the prior year quarter. For 2024, we are reducing our CapEx net guidance compared with our original expectations. I will elaborate further during my outlook discussion. In Q1, we returned capital to our shareholders through $3.7 million in dividends and $100,000 in repurchased shares. In completing the review of our results, I would like to expand further on our accelerated plan to capture additional cost savings in the year and better align our cost structure with our go-forward business needs. In my short time here at ATN, I have been closely assessing our businesses with an eye on how we can improve our profit margins to better align with industry benchmarks and increase returns to shareholders. Bringing a fresh perspective to this analysis has allowed us to identify several opportunities for capturing additional cost savings, from leveraging further efficiencies with common suppliers to streamline operations. In light of current business dynamics, we are approaching this task with heightened urgency. While many changes will require careful planning and be implemented over time, we are preparing to take action as soon as operationally possible. It is our goal to start to derive benefits from some initiatives in the second half of 2024 and ensure our long-term financial success. With that, I will move on to our review of 2024 guidance. Today, we're updating our full-year 2024 outlook to reflect the impact of Q1 on our current expectations for the balance of the year. The company now expects revenues in the range of $730 million to $750 million for the full year, down from our previous range of $750 million to $770 million. Adjusted EBITDA in the range of $190 million to $200 million for the full year, down from the previous range of $200 million to $208 million. Capital expenditures in the range of $100 million to $110 million, net of reimbursed amounts, down from the prior range of $110 million to $120 million, as we balance decrease in operating cash. And lastly, we now expect to exit the year with a net debt ratio of 2.25x to 2.5x, which compares to our prior target of 2.25x and 2.4x. In the short term, we could see our net debt ratio move above that range due to working capital needs during the year driven by the timing of reimbursement. Our objective remains to bring down leverage closer to 2x over the medium term. Based on our current plan, we expect the cadence of adjusted EBITDA in 2024 to track closely with 2023, with over 50% of the adjusted EBITDA in the second half of the year. Finally, during my first few months with the company, I have been able to meet with our shareholders and visit with members of the ATN team across our market. It's given me a great appreciation for what we make possible and the importance of our mission. We certainly have more work to do, but I'm confident that we're taking the necessary actions to position ATN to optimize our growth opportunities and deliver sustained value for shareholders.

Thanks, Carlos. We are committed to managing the business to deliver exceptional value to our shareholders, employees, customers, partners, and local communities. There's work to be done in the quarters ahead, but the leadership team and the board believe that we have the right strategy, team, and offerings in place to deliver on our plans for 2024. Our enhanced digital footprint offers many exciting possibilities for how we can more expansively serve our customers and deliver durable and profitable growth, cash flow expansion, and value creation well into the future. With that, operator, we'd like to open up for questions.

Our first question today comes from Richard Prentiss with Raymond James.

First question I want to probe on, obviously, weak trends in a couple of the spots and delays on projects. When you guys gave or reiterated guidance back in late February, what really changed to make 1Q come in so late? Was it the win rate, or can you help us just elaborate a little further on what changed really in the 2 months from late February to where we're at now? And then what can you tell us about April trends?

The primary change since our last guidance relates to business revenues in a specific market that was part of a major program aimed at securing significant contracts. This sequence of wins was scheduled to be awarded in late Q1 and early Q2. Unfortunately, we weren't able to achieve the win rate we were aiming for. While we did manage to secure some incremental wins, it wasn't sufficient to bridge the gap in our ECF funding.

Regarding visibility for the remainder of the year, Carlos, you mentioned a 60-40 split on EBITDA. How confident are you in this guidance, and what factors contribute to your confidence considering the U.S. economy and other factors?

Look, in terms of the guidance, we believe that it's an appropriate revision based on the discussions that we've been having with our teams and their updated view on the outlook coming out of Q1.

And on another vein, obviously, the stock's down significantly today. What's the ability to do stock buybacks, but then balancing that with liquidity as well, as you look at kind of how you want to manage the balance sheet and the shareholder returns?

I think right now we are continuing with the programs we have in place and executing them as planned. We are not introducing anything new at this moment; we are focused on what we have already established. Regarding our business management, as we discussed earlier, our strategy will involve a combination of ongoing execution and cost management. We will pursue this with a sense of urgency in the upcoming quarters.

And then, are there any assets that might make sense to sell that you maybe are not getting value for in the public markets or in driving results? Any thoughts on potential asset sales?

So Rick, we don't speak to that, but we obviously look always at the opportunities that are out there to maximize shareholder value.

Our next question comes from Greg Burns with Sidoti.

Could you just further elaborate on the dynamics within the carrier services contracts that got delayed? Are these because milestones weren't reached soon enough and revenue is being pushed to the right? I just wanted to get a sense of your visibility on that part of the business and maybe timing of when those revenues get realized this year?

So the delays in the contracts were really delivery and construction delays. So some of these were impacted by some weather events that happened in Q1 in some of these areas. And some were due to some changes in requirements from the customers. None of this is revenue loss. These are just dynamics that move these out to a degree. And the reflected guidance represents a schedule of that revenue moving out from 2024 to 2025.

And then, in terms of the business service revenue trends that you were just discussing there. What was the reason or why do you feel that you were not able to convert this year? Was it just pricing is more competitive, more competition in those markets? What was the main driver of the lower win rate this year?

Look I think it was a range of multiple factors. We had set up a program to go after a pretty large pipeline. And we had expected a better conversion rate. So I believe it was a multitude of factors, Greg. And the dynamic moving forward is we have an established pipeline. We have much of the 2024 guidance includes projects that are actually in backlog. There is an opportunity to accelerate. We're working in detail with our markets to accelerate wherever we can to bring circuit delivery in so we can maximize revenue delivery for 2024.

And just so I'm clear, these are government contracts that are awarded on an annual basis. These aren't like federal grant funding support programs.

No. These are enterprise contracts, some of which are funded through different government programs. But these are really enterprise programs within our markets.

And then on the wireless side internationally, a little bit of a decline in the prepaid subs. Is there anything going on there in terms of the competitive dynamics within those markets? Why did you see that decline this quarter?

Yes. On the international wireless subs, there is additional competition from smaller 5G entrants in the markets. The movement in the sequential quarter really is reflected in Guyana. And we had aggressive holiday campaigns in that market. In the prepaid market, the churn was mostly attributed to folks that didn't top up on those SIMs that moved in the December timeframe.

Our next question comes from Hamed Khorsand from BWS Financial.

So first of all, could you just talk about what your plans are as far as what you look to do differently to capture some of the business that's lost, especially on the business side?

Yes. So there are a number of plans and activities in process. And we have a robust pipeline that we built. There is a more standard profile of win rate and customer acquisition rate built into our forecast for 2024. And we are aggressively pursuing. As I mentioned in the previous comment, there is quite a bit of backlog that we just really need to convert over. So there is an addressable pipeline. We are targeting a backlog of construction opportunities to be able to pull in revenues in 2024. So we feel confident in the guidance we've given, and we have a well-risk-adjusted pipeline.

And my question as well is, you're spending a lot of money adding homes passed and so forth. Then why is that not showing up as far as customers are concerned? I mean, your broadband customers went down sequentially. I mean, it seems like you're just wasting money at this point.

So on that point, we have had very good success in the investments we've made in international markets. And we've shown very good broadband year-over-year sequential growth. A dynamic here is that there was a significant amount of builds that took place in late 2023 and even into early 2024. And that's a pipeline, an opportunity for ATN or companies to go after and to penetrate. So in our U.S. markets, we mentioned a pretty significant move more recently. So it really is an opportunity. And we have to go execute on the commercial side to fill up that network.

Our next question comes from Robert Beauregard from Global Alpha Capital Management.

Yes. We previously talked about the stock price and the strong reaction to what is really just a minor downward adjustment, with the fundamentals of the business still intact. Currently, it's trading at 0.7 times tangible book value, and the market seems to be unfavorable towards small-cap illiquid stocks. Are you considering privatizing the company and looking for ways to enhance shareholder value? It's easy to make that statement, but the stock has dropped from $80 to $20. Clearly, the market lacks patience for your development efforts, and the positive results will take time to materialize.

Robert, this is Carlos. So we appreciate your comments, obviously, and we'll take that to the Board and discuss it with them.

Like I said, the market is just not kind to small cap. It's nothing ATN. It's the whole small cap complex. I mean, there's tons of money out there with private equity and strategic buyers. And these kinds of multiples, a discount to book tangible assets. I mean, you have to consider these options.

Yes. Understood.

Our final question today is from Rick Prentiss with Raymond James.

We were going to ask the private-public question as well, so glad that got asked. I'll take my question then for the follow-up. Brad, can you help us understand operationally then the backlog? What has caused contracts to go into backlog? What will allow them to get out of backlog into producing? Is it weather? Is it construction? Is it supply chain? What exactly has put items into backlog and what specifically will get them out of backlog?

Yes. So Rick, there is a component of weather in the winter months in these markets. We operate in rural Alaska and the Rocky Mountains as well in the U.S. market. So there is a dynamic of coming into the true build season that will enable us more predictability on delivery. And we think there's an opportunity to accelerate. But the dynamics of working with larger carriers and some movements and requirements can always put delays into programs unexpectedly. But we are working diligently. We have a good line of sight on all this backlog. And we do think there's an opportunity to pull this backlog in that's reflected in our new guidance. And we'll continue to work very hard to do that.

Is there anything supply chain or labor oriented you're always looking to see? Obviously, we've come out of COVID, but there's still some lingering effects out there. But is there anything specific beside the weather and other items that you'd call out? What's the long pole in the tent that has to be addressed, do you think, the biggest one?

It's a great question. So no, we are not seeing significant impacts on supply delays. It's something that has improved in certain areas. If it has not improved, we've hedged to ensure that we can deliver. So it's really not supply or labor. So again, there are always dynamics with these large programs. And we really need to make sure that when we can influence decisions to move things more quickly, we are influencing those. So we've got a long experience of doing this. We think there is an opportunity to really continue to move this forward. Unfortunately, just the impact of 2024, there will be revenue that shifts into 2025.

So it does feel like just a calendar year shift and we should see stuff on 2025. How about longer-term visibility on the business? Previous guidance had kind of given some revenue thoughts on where the business could head. I know you haven't done that today, but how comfortable are you on looking at kind of longer-term trends to the business? Kind of the private question as well. Investors are trying to get a sense of visibility and growth in a small-cap name.

So Rick, we haven't provided guidance beyond 2024. And we will provide that here later in the year as well as some of our strategy beyond 2024. But really, our strategy is to continue to deliver on all of the investments we've made in the last couple of years with our own self-funded programs. Continue to expand upon those programs with government-funded activity. We mentioned in my prepared remarks the $91 million in 2023, the $155 million in 2022 that was awarded. These are programs being built now in 2024, 2025 into 2026. That's a great foundation to move forward. We really do like our strategy, Rick. We've got international market leadership positions in broadband. We've got gigabit solutions to 70% to 99% of all those markets. 5G networks rolled out. It's really just in this conversion of this investment phase to moving into our free cash flow generation optimization phase internationally. In our U.S. markets, we've got, again, a very strong foundation in carrier and wholesale. We have a large total addressable market for telecommunications in the areas that we serve. And that really is the opportunity ahead of us. Building good infrastructure and taking more of that total addressable share in our two U.S. markets is a great opportunity. I think we've got a great foundation strategy to do it. We've got to execute. We've got to continue to focus on delivery to be able to deliver shareholder value, deliver value to our customers, and overall value to all of our stakeholders.

Rick, I just want to add, I think when you look at the business, we're transitioning. We've said we're going to focus on cash generation. And I think when you look at the level of CapEx compared to prior years, certainly it's aligned with that. So when you look at our financial framework transition, there are a couple of elements that are already in place when you think about more of the mid to long-term. We're committed to bring down leverage closer to 2x over time. And I think when you look at those elements, those are all pointing to cash generation down the road. I think the other element that we have to complete is the piece of all the margins and that's going to be the focus for the coming months. As I mentioned in my remarks, I've been closely focused on margin improvement opportunities. We're currently at the 20s in adjusted EBITDA. So there's certainly room for improvement there. And we all understand that there are short-term opportunities. There are things that might take a little more time, but there's room there. And that's where we're going to find the additional financial strength to improve those returns to shareholders. It's critical.

All right. And to echo Robert's comments from earlier. But it's not just small capital liquid names like Comcast down 7% today. So even large-cap companies are having a tough time in the public markets right now when there is competition or when there's some delays and stuff. So okay, wish you well. Glad you're focusing on the margins as well as the pretty cash flow.

Thank you very much. This concludes our question-and-answer session. I would now like to turn it back to Brad Martin for closing remarks.

Thank you all for joining today. We look forward to speaking with you in the months ahead. Thank you again for your time. Take care.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Have a good day.