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Cable One, Inc. (CABO)
Q2 2018 Earnings Conference Call
August 9, 2018 11:00 ET
Kevin Coyle - SVP & CFO
Julia Laulis - President & CEO
Philip Cusick - JPMorgan
Frank Louthan - Raymond James
Craig Moffett - Moffett Capital
Previous Statements by CABO
» Cable ONE's (CABO) CEO Julia Laulis on Q1 2018 Results - Earnings Call Transcript
» Cable ONE's (CABO) CEO Julia Laulis on Q4 2017 Results - Earnings Call Transcript
» Cable ONE's (CABO) CEO Julie Laulis on Q3 2017 Results - Earnings Call Transcript
At this time, I would like to turn the conference over to Kevin Coyle, Chief Financial Officer. Please go ahead, sir.
Thank you, Denise. Good morning and welcome to Cable One's second quarter 2018 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 or in our recent SEC filings. Cable One is under no obligation and, in fact, expressly disclaims any obligation to update it's 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, Julia Laulis. And with that, let me turn the call over to Julia.
Thank you, Kevin. Good morning, thank you all for joining us on our second quarter 2018 earnings call. I will review a few highlights and then hand it over to Kevin for a full recap of our financial performance. Before getting into our results though, I want to congratulate and thank our associates. Earlier this summer, Cable One received the Cablefax 2018 MSO of the Year Award. This award is a direct result of the hard work, dedication and commitment of our associates. I couldn't be prouder to lead this distinguished team.
Our positive second quarter results also flow from our outstanding team of associates. Some highlights include year-over-year increases in legacy Cable One total revenues of more than 5%, and an adjusted EBITDA of 6.2%. These results reflect a successful execution of the long-term strategy we've discussed on previous calls, a strategy which we believe is serving both Cable One customers and our shareholders well. We were pleased to announce our second dividend increase earlier this week, up 14% to $2 per share quarterly dividend or from $7 to $8 per share on an annualized basis. Also related to capital allocation, you may have noticed that we've made significant share repurchases during the quarter which Kevin will address later in the call.
Now turning to our operations, let's review how HSD unit growth stacked up for the quarter. We saw 2.5% combined residential and business HSD unit growth for legacy Cable One. Meanwhile, legacy Cable One experienced it's strongest quarterly residential HSD unit growth on a year-over-year basis that we've seen since June of 2017. In the second quarter, we began testing market based pricing and new packaging options with early results showing higher selling rates to faster tiers, as well as decreased churn, especially from customers and competitive markets. We will continue to measure the results of these tests to ensure long-term benefits for customers and the company [ph].
Regarding pricing, residential HSD ARPU was up slightly more than 9% in legacy Cable One year-over-year. For NewWave or what we now call our Northeast Division, ARPU is beginning to climb and look more likely legacy Cable One figures. Total company residential HSD ARPU growth has been peeled by a proportional mix of marketing such as lack of discounts and improvement selling in upgrades. Our mode of rental rate adjustment earlier this year and increased usage based subscriptions to premium tiers.
Related to our Northeast Division, in the second quarter we promoted Ken Johnson [ph], one of the senior leaders of NewWave who came over as the Division Vice President following the acquisition to the world of SVP of Technology Services. Additionally, our teams completed the integration of finance and accounting processes, as well as all operational activities related to our network operations on our end as such. Our billing system conversion in the Northeast Division is also well underway with expected completion later this year. The migration of Northeast Division customers to legacy Cable One's more robust billing system will provide a more consistent customer-centric experience while allowing us to gain operational efficiencies. Work continues to prepare the Northeast Division markets for all digital conversion and the launch of gigabit speed to residential customers next year allowing us to eliminate the digital [indiscernible] communities.
On the business front, our SMB Group launched a second-generation of our managed WiFi service which offers expanded coverage and customer stuff management capabilities. This upgraded service covers upto 10,000 square feet when deployed with the latest WiFi technology installed by Cable One business. Additionally, business customers who subscribed to this service are able to manage their own WiFi settings through one gateway, our mobile app. We're already seeing delighted business customers subscribing at a first place. The second quarter also saw the deployment of hosted voice service across nearly 40% of our market, offering business customers the freedom and flexibility of the latest cloud-based virtual PDX technology. While the original project timeline slated on completion for year end, we now expect to have a 100% rollout by the end of the third quarter.