Welcome to the Anterix Fiscal 2024 Second Quarter Investor Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that this event is being recorded today. I would now like to turn the conference over to Natasha Vecchiarelli. Please go ahead.

Thank you and good morning everyone. I'm Natasha Vecchiarelli, Vice President of Investor Relations and Corporate Communications and I welcome you to the Anterix Second Quarter Conference Call. Joining me today are Rob Schwartz, President and CEO; Ryan Gerbrandt, COO; Tim Gray, CFO; and Christopher Guttman-McCabe, Chief Regulatory and Communications Officer. Before we begin, I'd like to remind you that we will make forward-looking statements during this call regarding future events and our anticipated future performance, such as our commercial outlook and guidance. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Investors are cautioned not to place undue reliance on forward-looking statements. Additionally, we do not undertake any duty to update any forward-looking statements. Important factors and risks that could cause actual results to differ materially from the company's expectations are disclosed in our most recent SEC filings. These files can be accessed on our website or on the SEC's website. After Rob provides his prepared remarks, we'll open the call for questions. With that, I'll turn the call over to Rob.

Thanks, Natasha. Good morning everyone and thank you for joining us. As we continue to execute on our vision of an industry-wide movement centered on 900 megahertz, I'm pleased to share that there has been significant progress made this past quarter across a number of key initiatives. Today, I'll focus my brief comments on three areas that emphasize our confidence in continuing to deliver value to our shareholders. First, I'll discuss our recently announced share repurchase program, which will be leveraging to transcend their anticipated contracted proceeds into shareholder value. Second, I'll provide examples of activities, accomplishments and industry thought leadership that are important milestones on our path to move the utility industry in scale to 900 megahertz private wireless broadband. And third, I'll provide an update on our customer demonstrated intent scorecard. So let's start with reviewing our new share repurchase program. One way that we're marking our confidence in our future is through the robust share repurchase program, we launched in September. Under the program, we have the ability to repurchase up to $250 million of our outstanding shares of common stock over a three-year period. With our current visibility, we see near-term opportunities in excess of this $250 million. We remain fully funded and are forecasted to have free cash flow for fiscal 2024. In addition, we expect to receive $53 million in proceeds from our existing contracts during the remainder of this fiscal year. As we have said throughout our journey, Anterix is doing more than simply providing spectrum. Through our ongoing collaboration with our customers and a host of solutions providers, Anterix is enabling a nationwide platform for utilities that will support a resilient, secure and clean energy future. One of the most significant validators of our approach came last month during the Utility Broadband…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. At this time, we will take our first question, which will come from George Sutton with Craig-Hallum. Please go ahead.

Thank you. Nice to have you all in Minneapolis recently for UBBA. So I'm curious if you've ever quantified, because the stark amount of both utilities and ecosystem partners that were represented at UBBA. Have you ever quantified the amount of investment being made by others to support and benefit from this ecosystem?

Hey, George, good morning and thanks for the Minneapolis shoutout. It was great to be there for the UBBA event. I think I want to make sure I understood your question clearly. We do focus on the spectrum spend clearly of the ecosystem. As we talked about we had 60% roughly of our spectrum value represented at that recent utility broadband aligned to that in Minnesota. When you expand into the full ecosystem of partners that we have we've said in the past that our spectrum represents, let's just say, roughly a third of the spend. And that varies based on the size and the nature of the build-outs. That's just of the network deployment costs. But obviously the private LTE systems are part of much broader solution sets and whether that's part of multibillion-dollar AMI RFPs, or whether that's part of large-scale SCADA systems that are being deployed or integrated into larger grid modernization projects. When you look at the percentage of what the spend is for just the spectrum, it's a relatively small piece compared to the grid modernization budget. I mean, utilities are spending upwards of $150 billion a year in aggregate on capital projects. And so you can imagine that relative to what we're talking about being a much smaller element of the overall budget.

Hey, George, it's Chris. And while we don't track the exact investment one of the things obviously we're tracking membership in the active ecosystem we talk about that regularly, but we also track those that have commercial-ready products and that number keeps so Itron, Rob referenced a few minutes ago. We're now at 23 companies that have commercial-ready products for 900 megahertz. And within those companies for some of them there are a multitude of products. So we are seeing incredible third-party investment in this opportunity and platform that we're creating.

Well for what it's worth we summarized our takeaways is we're waiting on the inevitable. So I'm curious separately if we could talk about the unfortunate situation in Hawaii and what happened there. And perhaps how boards at utilities have begun to respond with really moving this up to a much higher level of need rather than once?

Sure. Maybe I'll start on that and Ryan can add to it. A couple of thoughts. First of all, we are actually reporting live here from Arizona at the EI Financial Conference where most of the C-suite of the IOUs -- investor-owned utilities are gathering talking about key issues and talking to their investors front and center is absolutely wildfire mitigation unfortunately given both the experience in Hawaii, but also the growing experience that many utilities are having it's just been an ever-increasing issue not just what used to be was an operational issue and then into kind of a logistics issue. Now it's a financial liability issue obviously with what we've seen. And so the level of focus and investment as a result Ryan who can add some comments who was on this -- I mentioned in my comments on this foundation EEI foundation call last week with the SDG&E wildfire leader where they really had a chance to talk specifically about the application of private LTE 900 megahertz on their wildfire mitigation plan which they've now deployed on numerous circuits and actually seen positive results from it already. And so we think that that actual tangible realization of the solution set is going to hopefully continue to spread throughout other utilities.

Yes. Hey, George, Ryan here. Let me add a couple of pieces of commentary. I agree with you first off devastating to see the impact in Hawaii and the theme of the conversation as Rob said it's kind of not unique to Hawaii anymore unfortunately. Now part of the conversation we had with the foundation and this call was moderated by David Hutchens the CIO of Fortis Energy was very specifically focused on just how pervasive these types of risks and threats are starting to become moving out beyond the West Coast. And I think there's a realism to it as we start going through these situations around how do we be better prepared to deal with risks proactively. And you have a specific topics that we were talking about with San Diego and one of the benefits of the falling conductor protection solution it's one of those technological solutions. It's really purpose-built to be able to detect, isolate and clear aligned before it becomes a potential risk to ignite a fire quite different than detecting a fire and being able to drive mitigations and being able to slow it down or dispatch resources and crude. And so it has been a very important conversation as Rob said kind of risk and the risk attributes of it are very pervasive. We're in many of these conversations actually here right now in Arizona at EEI. It is really a topic of the event is to continue to manage risk and wildfire mitigation being one of those existential ones that are just impossible to ignore given the both impact on human lives and the potential impact to drive utilities into bankruptcy. In our role, as it continued to be identified and just how important it is to drive the advancement of multifaceted solutions to be able to deal with these kinds of risk and technology is a major, major component to that in addition to physical things like dealing with the tree canopy and pruning even elements of hardening and covered conductors et cetera. But the advancements of technologies are necessary and critical component of that architecture and being able to put those out there at pace is part of the solution.

Yeah. And George, Chris, I'll just finish it up by saying the rating agencies, right? So Moody's, S&P, Fitch all of them are making this a focus. And Fitch does a state of the sector breakfast every year that sort of helps to kick off this EEI financial that we're all at and the entirety of their focus during the breakfast was on wildfire. And as Ryan and Rob referenced the risk issues and the impact the potential for bankruptcy the existential elements of its payouts things like that. And so it is as Ryan referenced sort of front and center here, but it's really illustrated and fit spending the entirety of the state of the sector breakfast that they do on this issue.

Interesting stuff. Thanks, guys. Appreciate it.

Thank you, George.

And our next question will come from Mike Crawford with B. Riley. Please go ahead.

Thank you. Is there a second milestone you're expecting to occur with Evergy this quarter?

Mike, hey, this is Tim. So Evergy, they prepaid the $30 million at the beginning of the deal right after we signed that one. I don't know, if you're maybe referencing Exelon, but we've got money due from them this quarter roughly 20 -- or excuse me Xcel not Exelon I got the wrong name. But $20 million is due this quarter from them just roughly the same as we got last quarter.

Okay. And then can you just remind me where the other $32 million was coming in I guess in the March quarter?

Correct. Yeah. So we'll have another $16 million from Xcel and then we anticipate $15 million from LCRA at the beginning of that deal which should come in actually December time frame.

Okay. Great, Tim. And then I suppose, what I can tell from your demonstrated in times that you've had one additional utility, representing about a $50 million licensing opportunity move into above the threshold in the last three months. Is that accurate?

That's correct.

Okay. Thank you very much.

Thank you, Mike.

And our next question will come from Simon Flannery with Morgan Stanley. Please go ahead.

Great. Thank you and good morning. First on the buyback nice to see the new program and the initiation on that, how are you thinking about cash balances and liquidity? And maybe you can kind of talk about the LTE OpEx burn here. But should we think about basically taking the $53 million out of the ongoing OpEx and then use that against buybacks? Is there any other way to think about it?

Yes. I think -- Simon, this is Tim. We would expect to want to keep somewhere between $40 million to $50 million of cash on hand to cover the annual OpEx spend that we've got and anything above that we would consider looking at ongoing clearing. But outside of that we'd look at that as kind of excess liquidity that we push into the buyback program. So we expect in this new program to be pretty active immediately. And so you'll start to see that as we report on the next few quarters.

Great, great. And the T-Mobile and Dish 800 megahertz is sort of coming to a head right now. The DOJ gave them I think until April. But I think Dish had said recently that there probability been able to buy that spectrum from T-Mobile has dropped. There's other counterparties out there potentially looking at it, potentially for private networks. Would you be able to just comment on how that 800 fits against your 900 either for you as a partner or as a competitor? Would you have an interest in working around that?

Hey, Simon, it's Rob. So as you know, we know that spectrum well since the origination of it was -- I think the license still say Nextel Communication on them. We follow them actively and understand it. Our view is just broadly on any spectrum opportunities, we're always going to be opportunistic in looking at ways to be able to capture that for the benefit of our shareholders. The specifics of the ongoing dialogues both in the courts and between the parties. We talk to a lot of the folks, but also read all the good research that you and others write about this. It's hard to judge the tea leaves, but most likely, our view is that spectrum ends up with a valuable carrier network to do what carriers do well which is serve consumers enterprise, should it come to market in an auction. There's a lot of hurdles that would have to go through in order to get there. We'd be absolutely looking to see if there's opportunities for us, whether it's in partnership with others, including the current or future owners of that spectrum. So just to go back to your other question, I just want to -- on the buyback piece, I think it's important to say that you heard it in my statement, but I want to restate it. Our confidence in what we see in our near-term opportunities is really what gives us the confidence to put out that $250 million buyback program. We've got great visibility of all the activities spending time with these utilities both at UBBA and EEI. And so really just gives us a strong confidence that we'll be able to utilize that program in the near future.

Good. That's helpful. And then maybe just one last one. We continue to talk about LTE, but the carriers typically like talking about 5G and moving most of their traffic and most of their subscribers on to 5G devices covering most of the country now. So what are you hearing from the utilities? And as this 5G ecosystem builds up, 5G stand-alone cores are out there? Is there more interest in having a combo LTE 5G solution?

Yeah. I think look carriers don't like technology risk in any way. And so one of my favorite quotes from one of the leaders of Southern Company, the pioneers and using private LTE talks about 4G as being their workhorse. And we've got to realize, these LTE systems are placing technologies, they put out 15, 20 even 30 years ago. And so -- but what we're putting in place now and it was a great form at the Utility Broadband Alliance where we along with Ericsson, Nokia and Qualcomm talked about the future of 5G on 900 megahertz of which all of them stated their high confidence of that migration path. And that's what the EEI and LTE is right the evolution, but also the forward compatibility of the gear that's being sold by leaders like Nokia and Ericsson. So what utilities are putting in place now as infrastructure will be software upgradable to be able to utilize 5G when they need it. There's no use cases today that are compelling, that are driving that, but I'm certain there will be at the right time. And so remember, we're signing 20- 30-year relationships with these utilities. And so over that life span that we will continue to be their trusted adviser and helping them figure out that path of evolution. And so we're working with the utilities and a lot of those ecosystem partners in the 3GPP process to make sure that our brand continues to be supported through all the new revisions that occur. We're always looking at other ways of expanding our spectrum opportunity to in the future should there be any additional needs and as utilities both serve their own needs but they're also serving needs of other folks within their service territories. And those could be municipal and cooperative utilities those could be other industrial entities. And so we think there's opportunities to take this initial infrastructure and continue to build upon it both in services and products, but also expanding to serve other parties like-minded parties what we like to say.

Okay. Thank you.

Thanks Simon.

[Operator Instructions] Our next question will come from Walter Piecyk with LightShed. Please go ahead.

Thanks. Rob, you've had I think $500 million or so in Phase III for, I guess, about a year, if there was like a Phase IV that you created where someone pans out, what do you think that would be in that mix of $500 million?

Yeah. I think – well, we've had those spaces out for -- since we've launched our commercial operations post the FCC ruling. We had a demonstrated intent really to give you that granularity to think of it from a different facet. And so we're measuring element by element of the things that utilities are doing that are moving them through those phases and really driving them towards a contract process. So I think when you're looking for that granularity within that phase, our DI as we call it is probably the right way to understand that progress. So when you see the movement that we've had just in the few quarters that we've been reporting that continues to expand even as we've had entities like LCRA signed and they obviously fall out of that in a good way. We continue to see growth in those as we say above that threshold where they're showing enough elements to show that they're showing significant intent that we have confidence about them contracting.

But maybe I'm confused the DI is that's a different tracker? Is that -- so DI is -- or Demonstrated Intent is after someone has been in the Phase III bucket, or where it's -- I think what's -- how do you describe it, negotiation and commitment phase? So DI is after that, or is that before that?

Yeah. It's intersecting almost -- so think about the three phases is kind of the classic sales funnel as we're tracking through those three categories. But DI measures on much -- many more characteristics, the things that we've realized are indications of them getting to contract.

Is it like a circle, or DI -- So all the DI is in Phase III right now? Do I have that right?

DI is actually -- Walt it's Ryan here. DI is actually covering Phase II and Phase III specifically, the 16 deals we referenced. But Rob said like it's intended to provide more overlap and granularity with the 20 metrics of the items. I'll give you one example. There's different things that happen in the phases of the pipeline. But very specifically in DI, one of the elements that we noted here is when we're actually specifically passing contract papers and is one of the pieces that we flagged on. It obviously happens within the phases of the pipeline, but it's a very specific measure obviously of intent as we're starting to pre-negotiate terms for example. Obviously we don't break those out into a separate phase of the pipeline as we can't get down to that level of…

That sounds like -- but the way you describe it the way you describe, it sounds like negotiation and commitments I would think that all of DI should be in Phase 3, no?

Well, not all of them are at that level of step. Yes, one of 20 things. So, there are several other pieces that are equally important while we're even getting prepared for that. And that's why we've got some of that kind of later stages of Phase 2 is to work in the way in a Phase 3.

And just also we've had entities that have jumped past those phases, some of the deals we've done where they've gone from a standing start relatively below the threshold in DI and not in Phase 3 and suddenly accelerated because they -- for one reason or another they've moved forward and contracted. So, it's two different facets of the way we look at our customer flow, but we're happy to go into it in more detail with you.

Okay. And the DI I guess I could ask my first question may be targeted DI. So, if there's a DI Plus or DI MAX in media terms, where someone's 10 is out and getting ready. Like how much of the demonstrated intent is getting you closer to actually getting something on the tape?

Yes, I think to bring our third number on the table in there. I think the -- what we just talked about with our share buyback program by putting out that scale and saying that we have visibility in our near-term opportunities in that scale. That's really what -- that's how I'd probably answer that question, Walt. Again, we have a strong influence on these opportunities. We can't predict the precise timing, but what we're seeing is this kind of broad movement and you're really trying to identify that tip of the iceberg. I think that's the best way to talk about the scale of what we're seeing.

Okay. Just a question for Chris. Biden put some stuff out yesterday. I think -- who was it I guess, I'm blanking on his name not -- Carr [ph] had some negative -- Commissioner Carr had some perhaps negative things to say basically just saying it was kind of bullshitting that that spectrum was going to hit the market anytime soon. I'm just curious kind of can you give us your take on like does any of that spectrum hit the market? Is that stuff that your utilities would look at as they've looked at CBRS in the past in terms of being integrated with the low-band spectrum that you can have to offer.

Yes. I mean, Walt, I think -- first of all, I think the process of getting that spectrum and the nation's sort of spectrum plan to market will take some time. We're always excited to see potential spectrum opportunities as Rob referenced whether it's or other bands that we think can be accretive and valuable and beneficial to our shareholders and additive like CBRS can be complementary to our 900. So, we definitely track that. That spectrum will have to go through a process at the FCC. Much of it will likely be auctioned. So, we certainly are aware of it. What we're doing and you've heard us talk about this you've heard this theme throughout many of our calls is we're building a solution set sort of an ecosystem of solutions that makes our spectrum different than other spectrum opportunities because it's wrapped into 110 companies and 11 utility strategic Advisory Board members, all the things we talk about in terms of creating value and creating solutions for the sector. But certainly if other opportunities from a spectrum perspective come to play, we will be actively aware and participating.

I mean where do you think the government is right now? Obviously, the government can change shortly. But where are they right now, in terms of shared spectrum. There's been a lot of debate around CBRS. I mean the cable guys claim they're using it, but it doesn't seem like it's actually getting deployed aggressively, yet. Your customers have integrated it. Do you think that shared spectrum is something for the future, regardless of who's in charge at the FCC? Or is it the kind of lost its luster?

Yes. So micro, macro. So, I'll take micro. The sector we're serving they want and need control. They want and need certainty. And so the idea of relying completely, on a shared spectrum opportunity, is just not in their core way of thinking. And so when you talk about CBRS, there are some utilities who bought those PoW licenses even those have some unique aspects and traits to them. And so we likely will see many of them pursuing Anterix in 900 megahertz. But share -- then I'll go macro, shared from a macro perspective I think there are spectrum bands that only can be shared going forward. And so I think -- I don't think the concept of shared will go away. I think we'll still see it from time to time and in certain bands. And there is, a little bit of a political element to it. Shared is appreciated more by the Democratic side of the aisle, and license and exclusive generally, but both parties I think understand the benefit of both sides. And so the luster rises and falls from time to time, but I think we'll see both a shared spectrum model going forward and an exclusive license auction model going forward, as well. Q – Walter Piecyk: Okay. And then, just last question. Given the low band nature of your spectrum, have you received any inquiries anyone sniffing around in the satellite industry, perhaps LEO constellations that are planned or in process that are looking for some additional uplink that they could use, in order to achieve their goals of trying to provide satellite connectivity to phones?

Yes. Well, I think look, we're watching talking with leading vendors on all those fronts nothing specific to really share there. We're really focused on saying this low-band spectrum has such high value for our utility partners, and what they're doing. Absolutely, the eventual hybrid approach of terrestrial and satellite makes sense for them and others. And so, not as a replacement or as a complement. And we foresee that that will be a product, that will also continue to supplement it. It's just like what we've watched over the decades, with carriers evolution starting with low band and all the supplemental things they've added to those networks the layer cake, other elements of technologies to strengthen those systems, we'll see the same thing here. 900 will be the foundational enrollment for these utilities and other critical infrastructure and we'll expand from there. I'm sure that will include satellite over time. Q – Walter Piecyk: I’ll roger that. Thank you.

Thanks, Walt.

Thank you.

And this concludes our question-and-answer session. I'd like to turn the conference back over to Rob Schwartz, for any closing remarks.

Thank you, operator and thank you, everybody for joining us today. We're really looking forward to continuing to share our progress over time, and we'll talk to everyone soon. Thank you.

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