Good afternoon, and welcome to the Cable One First Quarter 2021 Earnings Call. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Steven Cochran. Please go ahead.

Thank you, Chad. Good afternoon, and welcome to Cable One's first quarter 2021 earnings call. We're glad to have you join us as we review our results. Before we proceed, I'd like to remind you that today's discussion may contain forward-looking statements relating to future events that involve risks and uncertainties. You can find factors that could cause Cable One's actual results to differ materially from these forward-looking statements discussed during today's call and during today's earnings release and in our recent SEC filings. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. generally accepted accounting principles. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our President and CEO, Julie Laulis. With that, let me turn the call over to Julie.

Thank you, Steven, and good afternoon, everyone. We appreciate you joining us for today's call. Before getting into our results, I want to welcome our more than 800 Hargray colleagues who are now Cable One associates. The acquisition of Hargray closed on May 3rd and we are extremely excited to have Hargray as part of the Cable One family of brands. I'd also like to take a moment to welcome Megan Detz, our new Senior Vice President of Human Resources who comes to us from Hargray. Megan is a valuable addition to the Cable One leadership team. She brings extensive experience in successfully guiding, motivating and integrating teams in fast-paced, high-growth companies. She will provide unique insight into Hargray's culture and initiatives, as we begin the process of bringing our two companies together. We will get into more details on the acquisition later in the call. I'll begin by reviewing some highlights and important events from the quarter, before handing the call over to Steven for a full recap of our financial performance. We are pleased to have once again delivered a quarter of robust customer and financial growth. In the first quarter, revenues increased by 6.2%, compared to the prior year quarter. Adjusted EBITDA increased by 14.4% and adjusted EBITDA margin improved 380 basis points to 52.9%. The record-breaking residential HSD customer growth we and others in the industry experienced in 2020 has led to conjecture about whether last year was predominantly a pull-forward versus a more sustainable long-term trend. It is still early in 2021, but so far, customer growth has remained resilient. In the first quarter of 2021, we added 22,000 residential high-speed Internet customers on a sequential basis versus 19,000 in the first quarter of 2020. On a year-over-year basis that reflects an additional 86,000 residential HSD customers for 12% growth. And that figure also excludes the roughly 17,000 residential data customers, as of March 31, 2020, that we contributed to Hargray and 5,000 customers acquired from Valu-Net in July of 2020. From the beginning of 2020 until now, our HSD penetration has increased nearly 500 basis points from 33.2% to 38.1%, highlighting how far we have come as well as the significant growth opportunity that remains available for us to capture. While it is reasonable to believe that residential HSD customer gains will eventually revert back to historical trends of stronger growth in the first and third quarters of the year, our healthy customer adds have continued so far in the second quarter of 2021. In fact, our April customer growth was notably strong. Given the pandemic surge in 2020, we believe that comparing 2021 customer additions to pre-pandemic 2019 figures provides important context when gauging growth. In this vein, note that in the single month of April 2021, residential HSD customer adds were significantly higher than during the entire second quarter of 2019. Residential HSD demand not only remained strong as far as net additions, but also increased for higher tier product offerings as well. Selling for packages with a download speed greater than 100 megabits increased from about 70% in the fourth quarter of 2020 to approximately 78% in the first quarter of 2021. That, along with other contributing factors, such as an increased take-rate of our unlimited data plan as well as migration of existing customers into higher tiers, contributed to our 6% year-over-year residential data ARPU growth. As a reminder, we haven't had a rate increase on our legacy system since the fall of 2015. And we actually decreased price on our higher tiers at the start of 2019, when we launched our new pricing and packaging across the legacy footprint. Business services revenues began to show positive momentum this quarter with growth of 4.3% year-over-year and 5.8% on an organic basis, after taking into account our Anniston divestiture and Valu-Net acquisition. Businesses are reopening and thanks to our seasoned sales associates, robust network, and extensive suite of products we continue to be optimistic about our rebounding growth in this area. We are particularly proud of this team for proactively seeking to partner with government and local entities to provide connectivity in rural communities. Our recently committed construction of a fiber optic network for Crown King School in Crown King, Arizona is one of our latest examples. This effort is just one piece of a larger project with the Yavapai County Education Service Agency that will deliver high-speed Internet to more than 72 schools and libraries and 100 businesses within Yavapai County. Prior to our build, Crown King School had access to just five megabits per second Internet service, a speed well below FCC bandwidth recommendations for schools and libraries. Cable One was also recently awarded a $1.4 million grant in partnership with the Arkansas World Connect program to construct an all-fiber network, delivering symmetrical speeds of up to one gigabit for residential customers and up to five gigabits for business customers in the rural communities of Ogden and Wilton. Those partnerships illustrate our steadfast commitment to bridging the rural broadband divide in the communities across our footprint. As an update, residential and business data growth for the businesses in which we have minority investments also accelerated sequentially as these companies added approximately 25,700 new customers in the first quarter of 2021. These customers are not reported in our results but they demonstrate the continued demand for high-quality HSD services as well as the shared commitment of our strategic partners. Also, keep in mind that Hargray net adds are included in that figure, and that a partial quarter of Hargray results will be reflected in our second quarter 2021 financials. Turning to our network. As a result of our continued investment and upgrades targeted at expanding capacity, our downstream plant utilization improved meaningfully from the prior year. Although average data usage increased 29% year-over-year to just over 500 gigabytes per month, our downstream traffic at peak improved from 28% utilization to 20% and upstream utilization remained steady at 18%. It is rewarding to know that we met the unprecedented surge in Internet usage throughout the pandemic and we're continuing to plan and invest as we expect to remain prepared for the future needs of our residential and business customers. The integration of Fidelity continues with plant upgrades throughout the small cities and large towns Fidelity serves, most recently in our Missouri and Arkansas markets. Despite the disruptions of the past year, we are still on schedule operationally and ahead of the original run-rate cost synergy estimate laid out at the time of the acquisition. Recently we reached another milestone as we successfully migrated all Fidelity associates onto technical platforms that connect Fidelity associates to internal Cable One tools. Earlier this week, we completed our acquisition of the remaining equity interest in Hargray that we did not already own. We appreciate the efforts of Hargray's management team who worked diligently with us over the past several months. Our combined company of more than 3,500 associates now serves more than 1.1 million customers across 24 states. We believe Hargray's fast-growing markets, like-minded strategy and commitment to providing fast and reliable Internet service to rural markets make it a natural fit with Cable One, while at the same time providing a platform for future organic and inorganic growth in the Southeast. As integration planning continues, we are excited to build on what we have learned from our prior acquisitions. We will work closely with our Hargray associates to gain insight into their best practices in order to seamlessly combine both companies. We are very encouraged by the reception we have received thus far. As a reminder, we anticipate realizing approximately $45 million in estimated annual run-rate synergies over the next three years. As the communities we serve continue to feel the impacts from COVID-19, we are proud to participate in the FCC's Emergency Broadband Benefit program. Through this program eligible households will receive up to $50 off their monthly bill based on their current Internet service and equipment rental or up to $75 off for customers who live on qualifying tribal land. Alongside this effort to ensure our customers stay connected to their loved ones, work and school, we have kept in place other COVID-19 relief measures including providing free public Wi-Fi hotspots across our footprint, a 15 megabit service for $10 per month for the first three months to help low-income families and our partnership with ACA Connect and the EducationSuperHighway for the K-12 bridge to broadband initiative, which helps school districts and states provide Internet access for students in low-income households. In addition to our COVID-19 relief measures, we are pleased to support Title I schools in Arizona, Idaho, Illinois, Louisiana, Mississippi, Missouri and Texas this year through our Chromebooks for Kids initiative, now in its eighth consecutive year. We recently donated 500 Chromebooks for the 2021-2022 school year to help bridge the digital divide for underprivileged children by providing computers to schools that lack funding. Supporting non-profit organizations in our communities remains a priority, as they work tirelessly to provide services to individuals and families during a time when the need is greater than ever. With the launch of Cable One Charitable Giving Fund last month, we will provide grants to non-profit organizations throughout our markets, concentrating on the areas of education and digital literacy, hunger relief and community development. And now, Steven.

Thanks, Julie. The first quarter of 2021 generated exceptional financial results. Revenues for the first quarter were $341.3 million, compared to $321.2 million in the prior year quarter, a 6.2% increase. This increase, which included $3.2 million of revenue from Valu-Net's operations, was fueled by a residential HSD revenue increase of 18.5% and a business services revenue increase of 4.3%. Meanwhile, first quarter 2020 revenues included $9.1 million from our divested Anniston operations. To give a sense of our year-over-year organic growth, when we exclude first quarter 2021 Valu-Net results and first quarter 2020 Anniston results, we would have seen first quarter total revenue increase by 8.3%, residential HSD revenue increase by 20.5% and business service revenue increase by 5.8%. Residential HSD customers grew by approximately 86,000 or 12% year-over-year, which as Julie mentioned, excluded approximately 17,000 from the Anniston system that were contributed to Hargray, and included 5,000 that were acquired from Valu-Net. Operating expenses were $101.5 million or 29.7% of revenues in the first quarter, compared to $105.9 million or 33% of revenues in the prior year quarter, a 330 basis point improvement. Selling, general and administrative expenses were $69 million for the first quarter of 2021, compared to $62.9 million in the prior year quarter. These expenses were 20.2% of revenues in the first quarter of 2021, compared to 19.6% of revenues in the prior year quarter. Net income in the first quarter was $68.6 million. Net income also included a $5.6 million non-cash gain from a fair value adjustment associated with the Mega Broadband Investments' call and put options we discussed last quarter. As a reminder, these options are subject to mark-to-market accounting on a quarterly basis. Until these options are exercised or expire, any changes in the assumptions used to determine their fair value could increase or decrease the resulting valuation, which in turn could cause significant non-operating fluctuations to our GAAP financial results from one quarter to another. Net income per share on a fully diluted basis was $11.19 per share, inclusive of the non-cash gain I just mentioned. Adjusted EBITDA was $180.4 million for the first quarter and increased 14.4% from the prior year quarter. Our adjusted EBITDA margin increased 380 basis points year-over-year going from 49.1% to 52.9%. We historically have seen our organic first quarter adjusted EBITDA decline from the fourth quarter as we pay the increased cost of programming at the start of the year, while our video rate adjustment was not fully recognized until the second quarter. But in 2021, as yet another indication of the diminishing impact video has on our business, revenue and adjusted EBITDA increased sequentially despite the timing mismatch. Capital expenditures totaled $71.9 million for the first quarter of 2021, which equates to 39.8% of adjusted EBITDA. During the quarter, we invested $11.5 million of CapEx for network expansion and $4 million for integration activities. Adjusted EBITDA less capital expenditures was $108.5 million for the first quarter and increased 16.7% from the prior year quarter. In the first quarter of 2021, we paid $15.1 million in dividends to shareholders. In March 2021 we issued $575 million of zero percent convertible notes due 2026 and $345 million of 1-1/8% convertible notes due 2028. The net proceeds of the offerings were $895.2 million after deducting initial purchaser discounts and other offering costs and expenses. From a liquidity standpoint, we had approximately $1.5 billion of cash and cash equivalents on hand as of March 31 and we continue to generate significant free cash flow. At quarter end, our debt balance was approximately $3.1 billion consisting of approximately $1.5 billion in term loans, $650 million in unsecured notes, $920 million in convertible notes and finance lease liabilities. We also had $459 million available for additional borrowings under our revolver at March 31. Overall, our debt-to-last quarter annualized adjusted EBITDA after netting cash-on-hand against debt was 2.2 times as of March 31. As Julie already mentioned, earlier this week we closed our purchase of the remaining approximately 85% of equity interest in Hargray that we didn't already own. The transaction implied a $2.2 billion total enterprise value for 100% of Hargray on a cash-free and debt-free basis. The acquisition was funded with cash on hand, including the proceeds from the convertible notes and the net proceeds from the new $800 million incremental Term Loan B. Following the closing of the Hargray transaction and the Term Loan B financing, we had approximately $3.9 billion in total debt outstanding and approximately $400 million of available cash and approximately $460 million of undrawn revolver capacity. Based on the current LIBOR rates, the projected annual interest expense on our outstanding debt is approximately $107 million with approximately 71% being fixed rate debt, a weighted average duration of approximately 6.5 years and a weighted average interest rate of approximately 2.7% after giving effect to our existing swap transactions. Chad, we're now ready for questions.

Thank you very much. We will now begin the question-and-answer session. And the first question will be from Craig Moffett with MoffettNathanson. Please go ahead.

Hi. Thank you. First, Julie, I just want to acknowledge and appreciate all that you talked about for the work that you're doing to close the digital divide at Cable One, so thank you for that. And on two related questions actually to that. One, it's a little hard to tell exactly what your organic footprint growth is but I know a lot of your peers are fairly aggressively pursuing edge-outs and that sort of thing. Can you just talk about what your expectations are for footprint expansion, organically? And then separately how you would think about participating in any funds that would come from the government if indeed we get a jobs act infrastructure plan? And then second, if you could also just comment on your expectations for the stimulus plan. I see you've already got a page on your website for potential applicants. If you could just talk about what you're expecting to see from that and what you've done to prepare.

Sure. Thanks for recognizing what our associates are working hard to do in these communities in small cities and large towns, Craig. As far as edge-outs, I don't know how much I would want to divulge about what our plans are. If you think about it, wherever we're edging out there is some other provider. There's really no place in the United States where there isn't a telco, another fiber provider, another cable company offering services. What I would say is if it fits our profile — if it is a small city or large town and if they have a need for a more robust, more reliable Internet service — that's something that we would consider. But I don't think we want to tip our hat to anyone about where we might be planning services in the future quite honestly. As far as the Emergency Broadband Benefit program, yes we quickly scrambled a bunch of people, obviously, working very hard to fill the needs of the government and USAC. And I imagine that, while not having a crystal ball, people who have our service will certainly consider upgrading since $50 of their bill will be paid for by the government. Keep in mind our 100-meg service is $55 a month. So it will be quite easy to upgrade to either our 200-meg service or our 300-meg service. But it's quite possible that we will draw some people into the service for the first time for folks to try a reliable hardwired broadband service because of this opportunity.

Thank you.

And the next question will come from Frank Louthan with Raymond James. Please go ahead.

Great. Can you walk us through the next steps with Hargray? What sort of incremental investment do you think is necessary? Can you give us an idea of where they are on the commercial side? They've got some network throughout the Southeast outside of the territory. How should we think about that as an opportunity going forward?

Sure. So I think from an incremental investment standpoint, on a relative purchase price standpoint this one is pretty low. I think we're guessing that it's somewhere in the $30 million range that is much more just alignment in common technology from a capital standpoint incremental that will be spent over a few years. But for the most part it's a very well-invested network, a lot of fiber in the network and commercial is a really important part of their business, given that they came from a more ILEC background, the same way Fidelity did. Commercial was always part of their services and they've been a big player in that. So it's an important part of their business and we're excited to both build our existing Cable One commercial business and learn from what they've done really well, as we combine the two teams together. And then, was there another question there, Frank? No. Okay.

Well, just I'd love to characterize the fiber networks that they have on the commercial side. I mean, how much fiber they have outside of the network? And how can you capitalize on that and what is your thinking for that part of the business?

Sure. So they've got a pretty robust fiber network that's throughout a great deal of Georgia, going over into North Florida. With the acquisition of Anniston from us, it increased their Alabama presence, working its way over towards Atlanta. Forty percent of their homes passed are actually served with fiber to the home. So it's a very deep fiber network from both a commercial standpoint and a residential standpoint. They've been making a lot of investments in it over the last few years, particularly under the Pritzker ownership. There's been a lot of investments made that we feel very fortunate to get the chance to monetize over time.

All right. I see their trucks running around here so. All right. Thanks a lot.

Sure.

The next question will be from Greg Williams with Cowen. Please go ahead.

Great. Thanks for taking my questions. First question is on Fiber to the Home. Over the last few months at analyst days and earnings calls, it seems like some of these telcos are indeed at fever pitch. In addition, private equity and infrastructure funds. I know you guys overlap with AT&T, who's been pretty vocal about it. And CenturyLink maybe to a much, much lesser degree. But I think Frontier also overlaps in your federated territories and last Friday they came out with some aggressive initiatives. Are you seeing or anticipating any encroachment on your space? And then the second question is more housekeeping. I think your SG&A intensity is up a little bit. Can you remind me what the costs are that are increasing as volumes pick up in the reopening, as we think about SG&A comps in 2021 versus 2020? Thanks.

I'll start with the Fiber to the Home question. We pretty much split our footprint with AT&T and CenturyLink. We have less than 10% of our homes passed that overlap with Frontier, so that's not an overwhelming concern. AT&T does have fiber. Our footprint is about 20% competitive, with about 13% of that being fiber to the home and the majority of that competitive overlap would be AT&T. So we do know how to go up against AT&T where they have fiber. Do we see any other encroachment? No, but we do track competitors very carefully. We monitor where anyone is coming into the marketplace, not just the ones we've mentioned so far. Then we turn the focus on ourselves and our associates, our customers and our community and we make sure that we are providing a service of value. That means the speeds that people need, the reliability that customers need and getting service from people that feel like neighbors. We think that's the most important part to remaining competitive.

Yes. And then on the SG&A side, Greg, and this is all in the 10-Q so you can pull it from there as well. One of the largest increases was $2.4 million related to M&A costs, as the Hargray transaction happened — most of the work around that happened in the first quarter. We also had higher health costs by about $1.8 million, which really tied to the fact that in the comparable period last year we saw a lot of people delay non-COVID medical visits. And so, that was a bit of a catch-up. We also had about $1.7 million higher in labor cost; a lot of that is actually just tied to how we accrue for our bonus and there was a greater bonus accrual this year's first quarter compared to last year's first quarter, when there was a lot more uncertainty about where we were going. And then lastly, $1 million in conversion costs — system conversion costs tied to our ERP conversion that launched effective April 1.

Great. Thanks for the color.

The next question is from Phil Cusick with JPMorgan. Please go ahead.

Hi, guys. Thanks. Julie maybe you can go again into that April strength. What have been the drivers there? Is that stimulus money? And how has May been so far?

Sorry, Phil, I misheard your question initially. April continues what we've seen quite honestly from about the start of COVID—it's just not let up. The same things that have been in play since mid-March, April of last year are continuing to drive growth. We see people coming to us from literally everywhere. It could be cell-only customers switching, it could be DSL customers, and it is also customers from fiber to the home. We have people being drawn to us because they need a fast network. They need a network with a lot of throughput. They need a network that is reliable and they need service from people that feel like neighbors. Our growth so far is not slowing down.

Okay. And you talked before about what the uptake looks like on plans above your basic price point. Can you update us on that?

On the sell-in above the $55 100-meg product, selling of packages above 100 megabits increased to 78% in the first quarter of this year. Currently, across our total subscriber base, 59% of them are on tiers above 100 megabits. So it's not just sell-in that's driving the higher take rate on tiers, but current customers upgrading as well.

That's great. And then maybe last thing, just digging into the Fidelity integration a little bit. What do you expect on pricing integration? Have you done that yet?

We have not done that yet, and I would expect exactly what we saw out of NewWave. NewWave's prices are exactly the same as Cable One's right now. Their ARPUs are the same as legacy Cable One's. I would expect the same thing to happen with Fidelity.

And the only thing I would add about Fidelity is they're growing tremendously as well. So we definitely have a mindset of don't fix what's not broken and so we will work through it, but there's no rush to make changes.

Got it. Thanks to both of you.

The next question is from Steven Cahall with Wells Fargo. Please go ahead.

Thanks. Maybe just first on the M&A front. After Hargray and a few recent acquisitions and some minority investments already in the pipe, do you expect to find more M&A opportunities in the pipeline for the next few years, or should we expect the next couple of years to be more about integration, organic growth and some of those bets that you've already made through the minority investments?

Well, I think we're always looking for opportunities to deploy our balance sheet and to grow on the strategy of broadband in rural markets, so we'll keep our eyes open for that. Clearly with what we have with Hargray and what we have with Mega we've got large deals behind us. I would anticipate that the opportunities we'll spend time on will either be investments in other businesses that set up things for the future, or smaller acquisitions that are more tuck-in in scale. I consider both Mega and Hargray to be somewhat platform acquisitions and both substantive in size that added a lot to our company. We'll continue to look for other opportunities to fill in the gaps. But needless to say, our footprint is now bigger so things that are tuck-in might not have been tuck-in before, but are now things that we can look at. So we'll continue to explore those but definitely wouldn't anticipate large transactions.

Thanks. And then a competitive one because it's one we've heard a lot from investors. We're getting asked whether or not you see T-Mobile's fixed wireless product as being a meaningful point of risk. I thought that data point you just gave about 59% of the base above 100 meg was very helpful. Can you just help us contextualize what you think fixed wireless is going to mean for your market and whether you see it as an incremental competitive threat?

Certainly, we stay very close to what T-Mobile is doing, but also understand that they need to invest in 5G in order to serve their cellular customers. Customer needs are clearly being driven by much higher data use rates and I really think this fixed wireless product will require significant investment to provide at scale. I also see it as at least partially complementary since they will need backhaul. So I'm not overly concerned, but we keep our eyes on them and then turn the focus back on ourselves and making sure that we are providing what our customers need.

And Steve, I'd say the 200-meg point is important from a speed perspective, but just as importantly is the average customer using over 500 gigabytes a month and the ability to have a network that supports that kind of usage. Keep in mind, we're carrying a lot of the mobile players' traffic over our networks already as most of their usage is at home going over our Wi-Fi networks.

Yeah. Thank you.

The next question is from Brandon Nispel with KeyBanc Capital Markets. Please go ahead.

Great. Thanks for taking my question. Steven, one for you. Could you update us on what you expect from the contribution from Hargray either in the second quarter and the first full year of the acquisition? And then you mentioned a timing difference in the video rate increase and your expense recognition. Could you elaborate more on that? What would EBITDA margins have been had they been matched?

Got it. So on the first question, needless to say we won't give guidance on what they're going to contribute as we don't provide guidance in general. But you can go back and look at what we talked about regarding their fourth quarter annualized numbers. They continue to grow nicely. The acquisition was effective May 1, so we'll get two months of it in the second quarter and then obviously for the full second half of the year. In this transaction in particular, we're not expecting a lot of synergies in the first nine months, just from the standpoint that they've got their team in place executing on a plan that was already in place. We'll work to pull them in and integrate as we move into next year. But unlike Fidelity that had a lot of synergies very early, this will be spread more over time and a little bit more back-end loaded comparatively speaking. On the rate side of it, all I would say is we had basically a half a month's worth of rate increase on the video side in the quarter as we do a March 1st rate increase that, with billing cycles, really only gets you half a month's worth. So in the second quarter, we'll have the full representation of that rate increase in the numbers.

Great. Thanks.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Julie Laulis for any closing remarks.

Thank you, Chad. I want to again thank our associates for all they have done and continue to do for our company and for our customers. We appreciate everyone joining us for today's call, and look forward to speaking with you again next quarter. Thank you.

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