ATNI - NASDAQ

Good day, and thank you for standing by. Welcome to the ATN International Q3 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michele Satrowsky, Head of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I'm joined today by Brad Martin, ATN's Chief Executive Officer; and Carlos Doglioli, ATN's Chief Financial Officer. This morning, we'll be reviewing our third quarter 2025 results and our outlook for the remainder of 2025. As a reminder, we announced our 2025 third quarter results yesterday afternoon after the market closed. Investors can find the earnings release and conference call slide presentation on our Investor Relations website. Our earnings release and the presentation contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operations. These statements are subject to risks and uncertainties that could cause actual results to differ from those described. Also, in an effort to provide useful information for 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, ir.atn.com or the 8-K filing provided to the SEC. Now I'll turn the call over to Brad.

Good morning, and thank you for joining us to discuss ATN's third quarter 2025 results. Before I dive into our performance, I want to take a moment to recognize the exceptional work of our teams across our markets. Today's results reflect their commitment to operational excellence, their dedication to building long-term value. Our third quarter results show the continued execution of our strategic plan and validate the operational improvements we've been implementing across our business segments. The 3% revenue growth and 9% increase in adjusted EBITDA year-over-year demonstrates the positive momentum we've been building and the effectiveness of our operational efficiency initiatives. During the third quarter, we grew our high-speed broadband homes path by 8% and increased our total high-speed subscriber base by 1% year-over-year. These operational metrics underscore the value creation potential of our fiber and broadband investments. Let me take a moment to review the performance of our 2 business segments in the third quarter. In our International segment, we continue to make steady progress on our key priorities: enhancing mobile networks, improving service quality and driving operational efficiency. The investments we've made in network quality and data capabilities are translating into measurable results. better customer retention and higher average revenue per user, preparing the segment for sustained profitable growth. Third quarter revenues were up 1%, with adjusted EBITDA growing 3%. The stronger EBITDA growth reflects the operational leverage we're achieving through improved efficiency initiatives. We remain focused on driving sustainable value across our international markets by deepening customer engagement optimizing operations and enhancing profitability. In our U.S. segment, we're seeing tangible benefits from our investments in carrier and enterprise solutions with new site activations from our carrier-related services efforts, and continued momentum in our fiber-fed deployments. We're particularly encouraged by gains in Alaska's enterprise revenue and consumer fixed wireless wins, demonstrating improved operational execution and stronger pipeline conversion compared with last year. Third quarter revenues in the U.S. segment increased 4.6% year-over-year with sequential improvement driven primarily by carrier services growth. Adjusted EBITDA for the quarter was up 19.6% compared with the same quarter last year, reflecting both our strategic transition from legacy revenue streams to higher growth, higher margin services and recovery from a challenging third quarter last year. We remain focused on our key priorities. Expanding fiber and fiber-fed fixed wireless across markets where we have a durable consumer presence, while growing our base of business and carrier solutions. We are aligning our network strategy and capital deployment with this long-term vision. And while the transition continues, we're building the foundation for a more resilient, higher-margin domestic business. Domestically, our broadband infrastructure expansion continues to progress as planned. With several government-funded projects advancing through key milestones during the quarter. These fiber network investments remain central to our long-term U.S. growth strategy. Enhancing our network capabilities while creating new revenue opportunities as deployments reach completion. We continue to actively monitor federal broadband policy developments and funding mechanisms, including BEAD. Which offer opportunities to further penetrate underserved areas. As always, we're maintaining our careful approach to capital deployment while positioning ATN for additional infrastructure opportunities. Across our international operations, we are tracking geopolitical developments and the conclusion of hurricane season in our Caribbean markets, with business continuity and network resilience remaining key priorities. Our network teams work collaboratively with local authorities and partners to address potential disruptions while maintaining our service standards. To support these strategic and operational initiatives, we remain focused on the strength of our cash flow from operations to support our business initiatives while preserving the financial flexibility needed to capitalize on growth opportunities. Looking ahead, we're encouraged by the steady momentum across our business segments and remain focused on executing our operational road map. The revenue growth in our domestic operations led by carrier managed services expansion, and targeted enterprise sales execution reinforces our confidence in the direction we've set. While internationally, we're seeing stabilization in mobility trends and improving operational metrics. With 3 quarters of solid execution behind us, we are refining our adjusted EBITDA outlook while reaffirming our guidance for revenue, capital expenditure and net debt ratio. We're methodically strengthening our operational foundation and improving our cost structure to position the business for sustainable growth as we move towards 2026. We remain confident in our ability to generate long-term value for our shareholders. With that, I'll turn it over to Carlos for a detailed review of our financial performance.

Thank you, Brad, and good morning, everyone. I would also like to echo Brad's recognition of our team. Their disciplined execution has been critical in our third quarter results as well as in our stabilization efforts to better position us for the future. I'll walk you through our third quarter financial performance in more detail. Total revenues for the third quarter were $183.2 million, representing a 3% increase from $178.5 million in the prior year quarter. This growth was driven by increases across multiple revenue streams, including fixed services, career services, construction and other revenue categories, which more than offset the expected decline in mobility revenues as we continue our transition away from legacy products. Operating income improved significantly to $9.8 million in the third quarter, compared to an operating loss of $38.4 million in the same quarter last year. While this improvement was primarily driven by a $35.3 million goodwill impairment charge in Q3 2024. Our underlying operational performance improved year-over-year. Key drivers of the year-over-year improvement included a $5.1 million reduction in depreciation and amortization expenses reflecting our disciplined capital allocation strategy and the natural completion of certain asset depreciation schedules, a $3.3 million reduction in transaction-related charges compared to the prior year, and a $1.1 million improvement in cost of services to our ongoing cost reduction and containment initiatives. Net income attributable to ATN stockholders for the third quarter was $4.3 million or $0.18 per share. This compares with the prior year's net loss of $32.7 million or $2.26 per share. Adjusted EBITDA increased 9% to $49.9 million compared to $45.7 million in the prior year quarter. This improvement is the result of the company-wide efforts to improve cost management and drive margin expansion. Turning now to segment performance. Our International segment continues to deliver solid performance with Q3 revenues up 1% to approximately $95 million adjusted EBITDA growing 3% to $33.3 million. The investments we've made in network quality and data capabilities are translating into measurable results. Retention, sequential increase in postpaid customer base and higher average revenue per user. Combined with our cost management actions, these efforts are positioned in this segment for adjusted EBITDA growth. In the U.S. Telecom segment, third quarter revenues, excluding construction revenues, were $87 million, up 3.5% year-over-year. With improvement driven by carrier services and fixed business revenue growth. Adjusted EBITDA for the quarter was $21.2 million, up 19.6% compared with the same quarter last year. Our balance sheet position strengthened during the quarter. Total cash, cash equivalents and restricted cash increased to $119.6 million at September 30, 2025, up from $89.2 million on December 31, 2024. Total debt was $579.6 million, resulting in a net debt ratio of 2.47x, improving sequentially from 2.58x at the end of the second quarter. Our disciplined capital allocation continued during the quarter. Capital expenditures for the 9 months ended September 30, 2025, totaled $60.9 million, net of $67.3 million in reimbursable capital spending. Compared to $85.7 million in CapEx and $71.8 million in reimbursables in the prior year period. We also maintained our totally dividend of $0.275 per share paid in October. This dividend reflects our confidence in sustainable cash flow generation and our commitment to consistent shareholder returns. Based on our improved year-to-date performance and outlook for the fourth quarter, we are refining our adjusted EBITDA guidance for full year 2025, while reaffirming our other key financial metrics. Revenue, excluding construction revenue is expected to be in line with 2024's results of $725 million. Adjusted EBITDA is expected to be flat to slightly above 2024's result of $184 million. Capital expenditures are expected to be in the range of $90 million to $100 million net of reimbursements, down from 2024's $110.4 million. Net debt ratio is expected to remain flat with full year 2024 at approximately 2.54x with potential for slight improvement exiting 2025. Our refined guidance reflects our continued focus on cost containment and enhanced capital efficiency initiatives that we have been executing over the past several quarters. We expect some residual activity from these efforts in the fourth quarter, resulting in minor reorganization and restructuring costs anticipated to be less than $1 million. We remain confident in our execution capabilities and our path towards sustainable long-term value creation. With that financial overview, I'll turn the call back to Brad for closing comments before we open it up for questions.

Before we open the call for questions, I want to leave you with a clear takeaway. We are focused on disciplined execution, grounded in financial responsibility and confident in the strategic path we set. Our revenue and adjusted EBITDA improvements demonstrate that our key initiatives are gaining traction and translating into stronger performance. These results underscore our ability to execute effectively while adapting to evolving industry dynamics. Our long-term objective remains unchanged: to build a stronger, more efficient and more resilient ATN that delivers sustainable value for our shareholders. The foundation we've built through operational stability and strategic investments positions us well to achieve this goal. With that, operator, we'd like to open it up for questions.

[Operator Instructions] Our first question comes from the line of Greg Burns of Sidoti.

Are you being impacted in any way by the government shutdown? Is it affecting any -- awards for government subsidy programs or maybe like the rural health care market in Alaska? Are you seeing any impact from the shutdown in any of those areas?

Yes, really all payments. We've not seen any impact with regard to payments on programs, subsidies that we typically participate in. And we expect no impact here really through Q4. On that -- things preventing the future longer, things like permitting, we do a lot on Bureau brand management lands. Permitting things into '26 to pose some challenges. But as of right now, no.

Okay. And it's not delaying the any like new awards? Or is there any other impact to maybe new business development?

No. So I mean, one of the primary areas we referenced in the call is BEAD and BEAD is still in the review cycle under [ NTIA ] expected results from that will be in January. So we're expecting those schedules to be held. But no, no impact does it yet.

Okay. And you kind of mentioned maybe better pipeline conversion or execution in Alaska. Can you just maybe talk about some of the initiatives you put in place over the last year or so? Kind of get the close rates and the improvement in the execution in Alaska up and what you've done and what you're seeing there in terms of results from those initiatives?

Yes. So a couple of fronts there, Greg. And we've had a new team in Alaska. There has been new management in the last year. So with any new leadership team, they come in and really establish their ground game on the ground, and we're happy what the team is doing there. We are, we have been in the process of working with key partnerships. Keep partnerships with the LEO operators to help address more of the -- some of the rural health care opportunities that are in that market, it's a pretty large part of the telecom market in Alaska. And again, and that's some of the progress we're seeing here this year.

Okay. And then just lastly, in terms of cash flow. It's obviously improving nicely this year. What are your priorities going forward -- are you okay with where the leverage is on the business? Or do you want to bring that down? Or do you have other priorities for the improved cash flow that you're seeing?

Greg, this is Carlos. So look, we're happy with the way the cash flow is trending as you say, the operating cash flow is doing well. And with a more normalized level of CapEx, we expect to continue to trend leverage down. And at the same time, we are very pleased with the support that we're getting to the business with some of the grants on reimbursable programs that we have there. So we believe that things are working the way we have been expecting and we should continue to be able to push leverage down.

Thank you. I am showing no further questions at this time. So I would like to turn it back to Brad Martin, Chief Executive Officer, for closing remarks.

Thank you, operator, and thank you all for joining us today. We appreciate your continued engagement as we execute our strategy. We look forward to sharing more progress on our fourth quarter call. Have a great day.