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Cable ONE, Inc. (CABO)
Q2 2017 Earnings Conference Call
August 8, 2017 11:00 ET
Julia Laulis - President & CEO
Kevin Coyle - SVP & CFO
Frank Louthan - Raymond James
Stephan Bisson - Wells Fargo
Previous Statements by CABO
» Cable ONE's (CABO) CEO Julia Laulis on Q1 2017 Results - Earnings Call Transcript
» Cable ONE's (CABO) CEO Julia Laulis on Q4 2016 Results - Earnings Call Transcript
» Cable ONE's (CABO) CEO Tom Might on Q3 2016 Results - Earnings Call Transcript
I would now like to turn the conference over to Kevin Coyle, CFO. Please go ahead.
Thank you, operator. Good morning, and welcome to Cable ONE's Second Quarter 2017 Earnings Call. We're excited to have you with us this morning as we review our results.
Before we proceed, I would like to remind you that today's discussion may contain forward-looking statements relating to future events and expectations. You can find factors that could cause Cable ONE's actual results to differ materially from these projections listed in today's press release and in our recent SEC filings. Cable ONE is under no obligation and, in fact, expressly disclaims any obligation to update 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. And with that, let me turn the call over to Julie.
Thank you, Kevin. Good morning, and we appreciate you joining us for our second quarter 2017 earnings call. I will review a few highlights and then hand it over to Kevin for a full recap of our financial performance.
Our second quarter yielded strong results as we continue to execute our strategy, with legacy Cable ONE operations demonstrating top line revenue growth, higher adjusted EBITDA and industry-leading margins. Our acquisition of NewWave closed on May 1, and we are pleased that its results are now contributing to our combined success. Let me emphasize that only two months of NewWave operations are included in this quarter's earnings. Our second quarter results included legacy Cable ONE residential HSD unit growth of 2% in what is typically our softest quarter and residential HSD revenue growth of nearly 7.5%, legacy cable and business customer growth of close to 8% and an increase in business revenues of almost 14% for the quarter.
Total revenues were $241 million compared to almost $205 million in the second quarter of 2016, largely as a result of more than $32 million contributions from NewWave operations. Adjusted EBITDA margin for the second quarter was 47%. Legacy CABO adjusted EBITDA margin would've been nearly 49%. As I said earlier, Kevin will get into more detail on our results in a moment.
Just last week, we announced our first dividend increase, a nearly 17% bump to $1.75 per share quarterly dividend or from $6 to $7 per share on an annualized basis. As you've heard us say before, we look at our business through the lens of achieving sustainable profitability. We believe that is evidenced by our deliberate and thoughtful approach to various areas, including capital allocation, M&A and the operation of our business. We believe that our strategy and long-term focus have helped us attain industry-leading adjusted EBITDA margins, and we are proud of the efforts of our associates to achieve those results.
At Cable ONE, we strive to make our customers' lives easier. Recently, we enhanced our residential HSD product with the launch of WiFi ONE. WiFi ONE is a major step in advancing that goal while further distinguishing us from other providers in our markets. This advanced Wi-Fi solution provides our customers with enhanced Wi-Fi signal strength and extends and improves the Wi-Fi signal throughout their home. WiFi ONE helps our customers by eliminating dead zones and buffering, giving them access to our superfast Internet speeds for multiple devices anywhere in their home.
Meanwhile, our GigaONE rollout is nearing its completion for our legacy Cable ONE footprint. At the end of the second quarter, 90% of our legacy homes passed had access to our 1-gigabit service via GigaONE.
On the business services side, our expanded efforts to attract enterprise business customers are bearing fruit. We were recently awarded two significant enterprise projects that we believe will positively impact results beginning in the fourth quarter of 2017. We are encouraged that business services will continue to be one of the drivers of our success. We are pleased with the progress on integration of NewWave operations in what is now called our northeast division. You'll hear me use this interchangeably. In early fall, we will begin the work necessary to transition to 32-channel bonding, which will allow us to launch faster speeds, including GigaONE in the new NewWave northeast division footprint.
As expected, adjusted EBITDA margins for NewWave operations in the northeast division negatively impacted our results by 1.8 percentage points in the second quarter, but we anticipate that impact to lessen as the integration continues. Our independent research on NewWave market has confirmed that we have opportunity to grow revenue and units and continue to increase customer satisfaction across both residential and business services. We are looking forward to harnessing these prospects and appreciate the ongoing efforts of our associates to assimilate the various operational changes in order to make this happen.