Good day, and thank you for standing by. Welcome to the ATN International First Quarter 2023 Earnings Conference Call and Webcast [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Justin Benincasa, Chief Financial Officer. Please go ahead.

Great. Thank you, operator, and good morning, everyone. Today, we will review our first quarter 2023 results. With me here is Michael Prior, ATN's Chief Executive Officer. Michael will provide an update on our business and strategy as well as a high-level overview of our quarterly results. I'll then cover our financials and provide additional color where necessary. As a reminder, we released our first quarter results press release last night after market closed. Investors can find the release and results presented for this call on our Investor Relations website. Before I turn the call over to Michael, I'd like to point out that this call, our press release and the presentation containing forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described. Also in an effort to provide useful information to investors, our comments today include non-GAAP financial measures. For details on these measures and reconciliations to comparable GAAP measures and for further information regarding the factors that may affect our future operating results, please refer to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC. I'll now turn the call over to Michael for his prepared remarks.

Thank you, Justin, and thank you for joining us, everyone. I would like to start the call today with 3 key takeaways from our Q1 performance. One, our strategy is working and is driving growth in subscribers and footprint or addressable market; 2, adjusted EBITDA performance is improving in line with the subscriber and revenue growth. And 3, our 3-year outlook, as announced at the beginning of 2022 is tracking to plan. We expect revenue and EBITDA growth to ramp to bring us in line with the 3-year CAGRs we have forecast. At ATN, our central purpose is to provide connectivity for all. In doing so, we improve lives and communities and deliver lasting value for all our stakeholders. We go where the need is and where most of the larger telecommunications companies prefer not to go. To date, that includes the Caribbean, the rural and tribal lands of the U.S. Southwest and Alaska. Today, we are in the process of advancing initiatives to secure our vision and long-term growth. We call these strategic initiatives, glass and steel and first to fiber. They are core to our strategic 3-year plan, as I first outlined in the beginning of 2022. It is a plan with the intention to build a highly resilient customer base and average revenue per user, or ARPU, on the tail of relatively short-term increases in capital expenditures. To accomplish our goals, we are currently investing in quality assets to expand our strong market position, which should bode well for the consistency of future cash flows. Internationally, we are investing in our first to fiber strategic initiative to expand our market leadership. Through this strategy, we are bringing fiber-rich digital infrastructure to the Caribbean, expanding our network reach in growing markets like Kaman and Guyana and continually improving…

Great. Thanks, Michael. With much focus these days on the financial climate inclusive of interest rates and access to capital, let me start by sharing a few words on our capital allocation strategy and how we expect the moves we're making today to expand ATN's success now and in the years ahead. ATN is in a strong competitive position given our solid balance sheet to make strategic investments in advanced connectivity as we set out to do last year. Our operations generate significant cash flow that provides ample liquidity to support continued investment in advancing our growth initiatives that Michael talked about earlier. We have a disciplined and balanced capital allocation strategy that we'll continue to adapt as we deploy capital to reward stockholders, including our quarterly dividends, organic investments to help secure future growth and our share buyback program. In addition, we'll work to maintain financial flexibility, allowing us to remain opportunistic in making investments that can accelerate or enhance our strategy and returns. All in, our plan works to better serve customers by establishing a first-to-market advantage, which in turn will provide durable financial results for years to come. This is a playbook we've deployed successfully in the past. We anticipate that temporarily heavy capital investment cycle will be followed by a substantial increase in monthly recurring revenues and free cash flow. Turning to our results for the quarter. Total consolidated revenues increased 8% as you can see in our accompanying slide presentation that we've added to our website along with some additional financial tables. Operating income improved $0.6 million from $0.1 million a year ago. Adjusted EBITDA was up 6% year-over-year. These improvements were primarily driven by continued strength in the international segment, steady results in the domestic business as we benefit from the investments, we've made…

Thank you, Justin. ATN continued to execute at a high level this quarter with steady momentum across our markets. Strategically, our market approach enables ATN to deliver a strong product suite to customers and to secure our market leadership by growing subscribers and revenue and reducing churn. Being the first to provide a community true high-speed connectivity creates a unique opportunity to generate customer loyalty and build a strong base of revenue across all sectors, consumer, business and government, which in turn enhances operating cash flows and generates strong returns for our stakeholders. Looking ahead, we will continue to serve our customers well, advance our strategic broadband build-outs and make progress toward our 3-year growth objectives. With that operator, I'll hand it back to you to open up for questions, please.

[Operator Instructions] Our first question comes from the line of Ric Prentiss with Raymond James.

I want to start first on FirstNet. I think in my notes at year-end call, you had mentioned you'd be substantially complete with FirstNet this year like you're still seeing. I didn't know that maybe there could have been $27 million of revenue, $23 million from [indiscernible] was 2/3 in the back half. How is that reconciled to reconcile to what you said about $12 million to $14 million. And what percent complete are as we try and kind of keep track of that? I know it's a low margin product…

Yes. We were -- it was originally at that range. Some of that's going to fall into 2024 now and some of the site construction may go away. So we are lowering that number down to the 12 to 14, again, to be very back half of the year weighted.

Right, right. So the total contract, which again is low margin, might be less than that $85 million. I think I've written that way back on.

That is correct.

Okay. And is there a way to kind of help us understand what percent complete you are right now? Is it kind of in that [indiscernible].

Yes, it's about 75% complete today.

Okay. And obviously, that is excluded from the guidance because the long-term guidance talks about ex construction. How about Sacred Wind? Is Sacred Wind included in that guidance because clearly Sacred Wind was not there in '21. It was additive modestly in '22. It was in the first quarter. So as a secret one on top of that guidance? Or is it kind of get rolled into it then?

It gets rolled into it.

Okay. And I think I remember Sacred Wind might have been bringing about $10 million of annual EBITDA. Is that fair?

We did something like that last year.

And any reason to think that would go down instead of us as you look to spend capital there?

No, but it's really a full integration. So we don't really look at it that way. I mean it's already sort of obscured. But I mean, if you're trying to ascertain kind of what it brings in as it comes in, that's about right.

Okay. And then the revenues were never disclosed, but it looks like the margins might be in that 15% plus range kind of ballpark is just given before integrating and adding it into the rest of the company?

Yes, it's higher margin than the business that's going into. That's correct.

Sure. Okay. Stepping back away from it. You mentioned you might be pursuing and might have a similar contract to FirstNet with a second carrier. So is second net going to be similar low-margin contract to get stuff out there and you get some other business offer? Or how should we think about what this second net? I know they probably don't want to be called that, but the second contract would.

Yes, we are definitely not going to call it that. We'll talk more about it when it actually gets finalized. But just to give you an idea the way of thinking about it, it's really that the margins from the project itself are positive. The returns are positive. It looks attractive to us to do. But more importantly, when -- as we get sort of over the hump of sort of finishing off the vast majority of that old [indiscernible] business, it really releases us to optimize the business going forward. So they really -- we are really carrying 2 cost structures at the same time right now. So that's the main benefit that we see. And it's a nice underpinning of long-term recurring revenue as we continue to build out the fixed broadband revenue in the area.

Okay. That would also be kind of a construction project that would be outside of guidance, I assume.

Again, I think we'll talk more about it when there are details on the contract. I think it will be different in structure and P&L impact on FirstNet.

Okay. Last one for me. I look in private valuations have remained diverse, somewhat. Can you talk about what you're seeing in the marketplace as far as public versus private valuations and any M&A thoughts on your side as far as anything that might be interesting to buy or interesting to sell?

Yes. I think we do see the same. There are a lot of deals getting done still in the -- from infrastructure funds and traditional PE funds in the space. And they typically have multiples well in excess of how we're valued and other public companies are valued. And so that means it's harder for us to participate in bolt-ons. But it also is kind of a validation of the value we've been building because we look at some of these businesses that are being acquired, and we like our infrastructure, we like our trajectory. We like our market position much better. So I think we will continue to look at things. We always consider things if they come a process, but it's just not a core focus for us right now. We're really focused on executing this plan.

Our next question is going to be from the line of Greg Burns with Sidoti.

I know you're guiding for CapEx to step down to the 10% to 15% range after '24. But how should we think about next year? Does it -- do you step down towards that level next year? Or does this CapEx kind of stay elevated at what we're looking at this year, next year and then you kind of step down more significantly in '24.

I think it's more significant in '24, but I think it would probably tend to step down a bit next year as well on its way to a lower level than '24.

Okay. And then with the international wireless growth, what is your market share there across some of your markets? And I'm just trying to get a sense of what the growth opportunity is there? And is the growth -- are you taking share from anyone in particular in any markets? Or is it kind of greenfield growth?

Yes. We don't give a market share statistic and I'm not going to do it now, but I can answer the second part of your question. We are taking share. So there's -- I think, I would say, of our subscriber growth more to date is about taking share than market growth.

Okay. And then I guess, lastly, on the domestic wireless business. So with this -- the new managed services contract. Does the wholesale wireless component of your revenue? Does that now go to 0 or trend towards 0? Are we completely converting all that revenue into kind of long-term managed service contracts after this deal or for the most part, most of that revenue?

It's really what we call carrier service revenue. So already, those roaming contracts appear under that line in carrier services revenues that this would appear in the same line.

Okay.

I just going to say but generally, yes, they are replacing that wholesale rolling.

[Operator Instructions] Our next question comes from the line of Hamed Khorsand with BWS Financial.

A follow-up on this to be announced contract. What kind of preparations are you taking as far as the roaming business is concerned with the towers? And are there going to be more charges in Q2 as if you need to take towers offline? How would that work on the cost line?

I think we -- right now, we think we've taken the charges that we would anticipate by and large, I think they are reflected in what we're doing now. And we are -- we would be continuing to use our towers and there will be some -- there'll be some sites that we won't use some new tower sites, but by and large, it will be reused.

Okay. And then on the Alaska side, is there any seasonality in the business that you're seeing this year as far as the fiber build goes and adding on new customers?

There's not a lot of seasonality in that business. I mean there are definitely quarters. I mean, their numbers are big. So there are quarters that tend to come in larger than others. But generally, it's fairly straightforward. I mean it could be for something that got delivered in the quarter as opposed to seasonality, I would say, more. There is probably a flight from the residential fiber business. It's a little easier to sell and be active in the second, third quarter builds also can tend to be easier to execute then, although we do both all year around.

And then on the fiber build in Alaska, are you primarily focused on residential? Or are you seeing demand from commercial?

All things. We're building -- continue to build fiber to towers. We're building longer routes, government customers, but a lot of the sort of expansion and the capital spend that comes from that business has been slightly disproportionately around the residential.

And we have a follow-up question from the line of Ric Prentiss with Raymond James.

We've got a few more in. Following up on Hong's question on the sites that you reviewed and have taken a charge, how many sites are you left with? Are we kind of like in the 500 site range? Are we below the 500 site range, above 500 sites. How many sites are left?

So I'm not going to give you a precise number in sight, but let me just -- I think one thing maybe we were to be clear on, a lot of that restructuring cost is operating costs, right? So it's elements of the business, including people that support certain parts of the business. So some of it is sites, but some of it is people as well. So it is not material to our overall tower number though.

But can you give us a bread basket size about how many you've got? Because also, we've always wondered why couldn't or wouldn't you maybe put a debt financing on the towers or position them for potential sales someday depending on where things like.

Yes. We own a couple of hundred towers in that the sites are some towers that we still prepare is part of that. But we did come down -- I think it was like about 70 sites in the comp through the restructuring.

But a lot of that is emphasized was third-party side.

Yes, third-party sites, right? Yes. Anything we own, we still value the asset and are using it.

I'm showing no further questions, and I would like to turn the conference back over to Justin Benincasa for any further remarks.

Actually, I'll take it this as for Michael Prior, so thank you, operator, and thank you all for joining us this morning. We're excited about the future, given the essential nature of our offerings, the expansion of our network, our first-mover advantages in underserved communities and the financial flexibility we have within our control.

Thank you, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect.