Good afternoon, ladies and gentlemen and welcome to the Anterix Second Quarter Fiscal Year 2022 Investor Update. At this time, all participants are in a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, Natasha Vecchiarelli, Director of Investor Relations and Corporate Communications. Ma'am, the floor is yours.

Good afternoon, everyone and welcome to the Anterix second quarter fiscal year 2022 investor call. Joining me today are Rob Schwartz, our President and CEO; and Ryan Gerbrandt, our COO; Tim Gray, our CFO; and Chris Guttman-McCabe, our Chief Regulatory and Communications Officer. Before we begin, please note that during today's presentation, we may make forward-looking statements, either in our prepared remarks or in the associated question-and-answer session. These statements are based on current expectations or beliefs and are subject to certain risks and uncertainties that may cause actual results to differ materially. Risk factors that may impact our performance are identified in our most recent SEC filings. Following our prepared remarks, we will have an operator-led question-and-answer session. In addition, at the conclusion of today's call, a replay and transcript of our discussion will be posted to our Investor Relations website. With that, I'll turn the call over to Anterix' President and CEO, Rob Schwartz.

Thanks, Natasha. Good afternoon, everyone and thanks for joining our Q2 investor call. Today, Tim and I will provide you with an update of the key elements of our continued progress since our last quarterly call, including the signing of our third contract, some additional market indications of our progress and the authorization of a share repurchase program. Following our comments, we'll open it up for Q&A. As you'll see, there's a great deal of activity across the industry that's fueling market momentum and our continued confidence. So let's dive into the details, starting with Evergy. As many of you read on September 20, we announced that we entered into our third 900 megahertz broadband spectrum contracts. Evergy, a Midwest electric utility serving customers in Kansas and Missouri, executed a 20-year spectrum lease agreement with two additional 10-year renewal options. The lease spectrum spans Evergy's 28,000 square mile service territory, covering over 80 counties, including approximately 4 million people. The total prepaid lease payment of $30.2 million for the 20-year initial term was recently paid in full in October. This once again demonstrates the beneficial cash flow trend of the prepayment of our spectrum leases by utilities. Evergy plans to utilize the spectrum to deploy a private wireless network using LTE technology to provide critical broadband communications capabilities in support of their grid modernization initiatives. As highlighted during the recent Investor Day, Evergy intends to deploy smart devices across it's service territory to improve system awareness and control, enable a large-scale expansion of secure interconnected devices and is also implementing an advanced distribution management system, or ADMS, to automate outage restoration and optimize grid performance. So now in just the past nine months, we've secured three customer contracts for our spectrum with major investor-owned utilities. Ameren was first out of…

Thanks, Rob and good afternoon, everyone. With three contracts now in place, all of which have provided upfront proceeds, I want to point out some important outcomes from these transactions. First, our balance sheet continues to strengthen as a result with approximately $101 million in cash as of September 30, 2021. I'm also pleased to share that in October, we received an additional $17 million payment of previously contracted proceeds from Ameren and $30 million for the full prepayment of our initial 20-year lease term with Evergy, increasing our cash balance accordingly. Further, we expect receipt of an additional $55 million of contracted proceeds due from SDG&E and Ameren contracts through mid-2026. For the Evergy lease agreement which represents fair market value for their service territory, revenue will be recognized after spectrum is delivered based on straight-line amortization over the initial 20-year term of the lease and we expect to begin revenue recognition this fiscal year. In addition, now that we have delivered spectrum to Ameren, we will begin to recognize revenue in our fiscal third quarter. In our current fiscal year ending March 31, 2022, based on our current sales pipeline progress, we continue to forecast signing contracts with proceeds of over $200 million. Our Evergy contracted proceeds are included in this projected figure. From a cost perspective, we remain on-track with our forecast of spending approximately $30 million for clearing efforts per year for the next three years as customer acquisitions ramp up. Through September 30, 2021, we have spent about $12 million on clearing-related efforts this fiscal year. As noted previously, clearing costs can be accelerated or decelerated based on customer demand. In addition, our projected operating expense-related spend is estimated to run between $37 million and $40 million per year through fiscal '24. We have spent roughly $17 million in the first six months of our fiscal year through September 30, 2021. Finally, following the momentum of our business and related cash flows and the confidence in our continued performance, we recently announced that our Board approved a share repurchase program, pursuant to which we are authorized to repurchase up to $50 million of our common stock over a two year period. We are following through on our plans to return value to shareholders as discussed at our Investor Day in June, even earlier than anticipated. I look forward to reporting on our progress for this program in future quarters. That concludes our prepared remarks. I will now turn it back over to the operator for questions.

[Operator Instructions] Your first question is coming from Chase White. Your line is live.

Thanks. Good afternoon, guys. So a couple of questions here. First of all, is the contract pricing that we saw in the Evergy deal which was at a pretty good premium to the comp, something that we can expect going forward? And then second question would be, now that you've done deals with two complex systems operators, one that was effectively a sale and one that was effectively a lease. Any color on whether the other utilities that are also complex system operators generally are more interested in a sale or a lease?

Thanks, Chase. Let me start and then Tim feel free to jump in. I think on the question about the Evergy deal and it's pricing, we always say our goal is to get to fair market value in these discussions. As you know, price is one of the many terms in these agreements. And obviously, we're happy with the pricing. I think we'll stick with the idea that we'll continue to see prices at fair market value as we move forward. It is important to note that fair market value is really a reference to market conditions and comparable. And as we continue to see year-over-year growth of values of spectrum marked by the historic comparables we talked about of 600 megahertz auction, AWS auctions, AWS-3. But also now as we're seeing more and more demand for spectrum, right, what went on with C-band, what we're seeing now in Auction 110 of really strong continued demand for all bands and obviously, low band being the scarcest of spectrum, we expect to continue to see growth of values overall of our particular spectrum band. On the second question about comparable -- about the complex facilities and the kinds of transactions. We've been consistent in saying on those systems, we were going to be incredibly flexible to get accretive deals done, deals that bring value to our shareholders. As you noted, SDG&E was a sale where Evergy's was a long-term lease. We're going to continue to be within those bounds of flexibility and whatever it takes to good value-accretive deals done on complex systems. The important message and as I think we had these conversations earlier, there was questions of whether those complex systems would be part of our addressable market. And I think the key message here is that they clearly are as we've gotten two of those deals done and continue to focus on all the complex systems as being opportunities for us in our pipeline.

Got it, helpful. Thanks, guys.

Your next question is coming from Mike Crawford with B. Riley. Your line is live.

Hi, this is Katherine Knop on from Mike Crawford. Do you guys believe that the current Auction 110 will have any effect on pricing discussions with prospective customers? Thanks.

Thanks, Katherine. I think -- this is Rob. As I just said in the prior comments, Auction 110 and it makes me feel hear 110 because I've worked on auction 1, I believe. But Auction 110 is, to me, just another demonstrable example of the continued growing demand and need for spectrum, right? There's just -- we can see over the history. And there's always blips in between. But the trend line is clear that year-over-year, strong continued demand for licensed spectrum. We've seen other auctions where there's other models of shared spectrum, unlicensed spectrum. But as with our 900 megahertz, having licensed private spectrum, we think at the end of the day is going to be what a lot of critical business models rely upon and that's why we think 900 is so valuable.

Thank you.

Your next question is coming from Walter Piecyk with LightShed. Your line is live.

Rob, how you doing? Share repurchase; I guess, you announced this saying 9/30/21 [ph]. Can you tell us whether you bought any stock back after the quarter ended?

Tim, I'm going to let you take that question.

Yes. Well, we're going to report on that after each quarter. So we're not going to comment on when we're in the marketplace. I don't think that would be best for us or our shareholders. So we'll do the reporting on that on a quarterly basis. But we expect to be active throughout the two year period, starting with this quarter through the end of the two years that we talked about for the program.

So some companies like Iridium or Cogent, they seem to want to be stock pickers. And they talk about intrinsic value of their stock and that type of thing. Other companies just say, we're going to buy a certain amount every day. We're going to buy a certain percentage of the volume every year. I think America Movil at one point when they were doing that had that type of game plan. So how do you guys conceptually think about this? Is it -- when you talk about knowing that it's going to be over two years, is it going to be more of a steady program? Are you going to be opportunistic? Are you letting some random banker make this decision? Can you just give us a little thought process here?

Go ahead, Rob.

No. I was going to say that clearly, we have a program authorized and we did so earlier than we originally expected. We're going to deploy capital strategically to drive value to shareholders. And it's going to be opportunistic. So for us, that's really early in our evolution and we're going to continue to hopefully see as we projected, more contracted proceeds which will give us more capital to be even more aggressive we choose to do so. But for now, I think sticking to what Tim said is we're going to be revealing more about our strategy in arrears after we actually start executing. We think it's a prudent way to do it for the value to accrete to shareholders.

Basically, it's management, someone in management, that's going to make that decision on...

Yes, we're involved [ph].

Yes, we're absolutely driving it. And it's not, as you said, going to be a random banker or trader that's going to be driving how we're doing it.

Got it. Okay. So CBRS is my next question. I mean there seems to be a ton of momentum in terms of many applications for CBRS. We all know that you had one of your lease customers that's going to utilize that in the network. What role -- as this stuff has kind of progressed in the month and you talk to more utility companies, what role do you expect to play in the integration of CBRS into these networks? Or is it just -- do you kind of view it, Rob, is like one of these things like, look, it just shows there's -- if people need different applications, there are some mid-band stuff that they can layer on top of the low-band stuff that's necessary in a layer cake type of deployment. Just walk us through your thoughts -- your current thoughts on that.

Sure. I think you've probably seen a number of areas where we're working on the integration of CBRS as a complementary band in 900 really started with our -- as you pointed out, our initial customer work with SDG&E and some of the others that are licensed spectrum holders. But we're also working with other customers that intend to use unlicensed CBRS spectrum. So that's the beauty of that band is it's really available to everybody whether they bought a license or whether they're going to use the unlicensed. And we see that the complement of 900 really adds a lot of value of reliability to the unlicensed band. So if you have the resiliency of being able to fall back on 900, you can take greater risk by using unlicensed in CBRS. We're working actively also through our Anterix Active Ecosystem Program. We've got partners in there that are working on some of the integration capabilities. What does it do both on equipment side but also on an application side to be able to have both those bands. And what are the ways in which it can be used. And then, I think lastly is the way in which we're approaching it with the CBRS operators, the SaaS as you saw in our announcement with Federated Wireless, one of the leaders in the space, I would say the leader in the space. And we're working with them on helping bring utilities to Federated as a SaaS but they do a lot more than that. It's also about the integration of those services in the platform, the management and spectrum management. So I think really, the goal here is to -- the spectrum, like the technology is not what this is about for utilities. This is about solving the considerable number of growing use cases. And CBRS is really just another tool in our toolbox to be able to do that. So as we're looking at saying, how do you get to your distributed energy resources, microgrid, solar, battery storage, there will be places where complementary, either for more capacity or different kinds of coverage in building or otherwise, we can complementary use CBRS as part of that toolkit. And so that's why we think it's really valuable. It's a -- as you know, the physics of it are very different than 900. It's really good for in-building close proximity campuses. And then when you need to get building penetration in long distances, 900 is the natural for getting these big coverage areas.

Got it, thanks.

[Operator Instructions] Your next question is coming from George Sutton with Craig-Hallum. Your line is live.

Thank you. Ryan has been painfully quiet during this whole call, so I'm going to try to address my question to him. At the Analyst Day, you talked about Phase 1, Phase 2, Phase 3 deals. I wondered if you could give us a sense of movement across the phases. And then also, can you update us on the number of live pilots relative to when we talked at Analyst Day?

Excellent, George. Yes, so big picture on the pipeline. As we kind of laid out in the Investor Day, just to characterize kind of what we saw in the pipeline and what we're continuing to see, I think it's important to reflect on just kind of what we had in there from an opportunity funnel. So what we were looking at still in the pipeline is approximately $3 billion over market opportunity which represents about 85% of our addressable market. And it's important in the perspective of where we're putting our focus and effort really in terms of trying to move the customers ultimately threat as we're seeing the evolution of them down and through and being able to hopefully find ways to accelerate. What we've also got in there getting down into the details of the phases and I'll focus specifically on Phase 2 because it's where the momentum is that we're seeing as they start migrating their way through as a function of all this activity that Rob talked about in terms of market education and what's now becoming the pervasiveness of the ecosystem which creates other arms of marketing and sales fronts that are all consistently driving to a common outline. And so in that Phase 2, about one-third of our pipeline value lives in there. It's about $1 billion in total. And then that, in combination with what we still -- what we're working on in Phase 3 is what we were looking at in terms of our forward indications of both how we and why we have confidence still towards the end of this year. And then ultimately, as we map them all out, still driving the momentum to our fiscal year '24 year-end targets. But what's important about the pipeline in terms of what…

All right, that's great. I got you up to your word limit for the call. So Rob, I did want to ask you one other question relative to what you seem to be suggesting relative to the test case of Evergy and Ameren on a network of networks. Can you just be a little more clear at what you're suggesting there? Could that be a test case for the network of networks?

Yes. Look, George, every customer that we've signed on were really intimately involved. And once they acquire the spectrum in their design, development, deployment that we've got invested interest in seeing them succeed. And so we're -- we've been very involved with Ameren. Obviously, now with Evergy being bordering in those 25 Missouri counties, there -- for the first time, we're seeing those a budding territories and that brings up the opportunity for us to create more value for each of them, right? And that simple things like mutual aid, right, when utilities roll trucks into each other's territories to help restore after bad things happen; that's a simple idea. But also then you get into the network of the actual network, right, the core of the way the LTE network works. The service layers on top of that and the ability to integrate those and start to demonstrate the value of that, first, to help our initial customers but obviously, that creates what's a scalable model from our standpoint, being able to expand that regionally and eventually nationally. So, that is the seeds of what our vision of the network of networks is. And it absolutely will be an opportunity for us to start demonstrating that capability through those relationships.

Got you, super. Thanks, guys. Appreciate it.

Thank you, George.

We have no further questions from the lines at this time. I would now like to turn the floor back to Rob Schwartz for closing remarks.

Thank you, Catherine. And thank you all for joining us today. And we look forward to our continued discussions. And always feel free to reach out to us with any additional questions. Have a great day.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.