Ladies and gentleman, thank you for standing by and welcome to the ATN International First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Justin Benincasa, Chief Financial Officer. Thank you and please go ahead, sir.

Thank you, operator. Good morning everyone and thank you for joining us on our call to review our first quarter 2020 results. With me here sitting a socially safe distance from me is Michael Prior, ATN's Chief Executive Officer. During the call, I'll cover the relevant financial information and Michael will provide an update on the business and outlook. Before I turn the call over to Michael for his comments. I'd like to point out that this call and our press release contain forward-looking statements concerning our current expectations, objectives and underlying assumptions regarding our future operating results and are subject to the 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, we refer you to our earnings release on our website at atni.com or to the 8-K filing provided to the SEC. And I'll turn the call back to Michael.

Thank you, Justin. I kind of, like having you make this statement and I may keep that. All right joking aside, obviously major, major changes going on understatement over the past couple of months and because of that, I'm going to limit the amount of time I spend in my prepared remarks, covering the historical results in order to make sure investors get a sense of our outlook and potential impacts from the Coronavirus pandemic. So, having said that I want to note that, this is the third quarter in a row of significantly more positive results from our telecom operations. There are still some areas that need improvement, but the overall trajectory has been strong and shows real progress. The International Telecom experienced moderate revenue growth and another quarter of strong broadband subscriber gains and U.S. Telecom delivered results that reflected a recovery in that business, similar to the fourth quarter and far ahead than one year ago. Consolidated operating income and net income also would have shown greater improvement but some negative items that Justin will touch on held us back from a strong profit performance. Since the Coronavirus outbreak turned into a global pandemic in the last part of the quarter, we have taken a number of actions to adapt and to keep our employees and customers safe. So far, we have been fortunate and not having any related health impacts to our roughly 1600 employees and we have been able to keep substantially all of our services running. We have not taken any major hits to date and we are moving rapidly to adapt our operations to the current uncertain environment. As the outlook, we feel pretty good about the underlying strength of our business and demand for our services, but we do expect there will…

[Operator Instructions] You may begin.

Okay. All right. Are we back operator? I think we're on. Alright. I think we dropped off right after Michael handed off. So I'm just going to go back into what I started on the numbers for the quarter. So for the first quarter, total consolidated revenues were $110.9 million, up 7% from last year's reported total of a $103.3 million. This year-on-year growth was led by the recovery of our U.S. telecom segment where revenues increased 27% over last year and we continue to experience steady growth in our international telecom segment. Consolidated EBITDA for the quarter was $29.8 million, up 31% over the first quarter of 2019. I should also note that we restructured the presentation of revenues on the consolidated P&L into two revenue lines, communication services and other revenues to better align with industry standards and how management looks at the business. In addition, we provide a further break out of each of these revenue categories in the segment financial tables. Looking at each of the segments and starting with International Telecom revenues were $82.3 million, up from $80.3 million last year and EBITDA was up 3% to $27.8 million. Similar to the last several quarters, much of the year-over-year increase is coming from our broadband subscriber and revenue growth in the international markets where we have invested in expanding and upgrading our fiber networks. Capital expenditures in the quarter totaled $10.5 million. Early in the year, we expected 2020 capital expenditures in the segment to be between 45 and $50 million for both maintenance and additional growth projects in multiple markets. As we continue to assess the impact of the pandemic, we currently expect CapEx to be below this forecast as we anticipate delays in completing certain projects and choose to defer or reduce some…

Before you go, Yeah. Before you go back to the operator, I think I got a note that we cut off before the end of mic, so to speak part, so I think one, I just finished at the very end, it might be some overlap, but just if you can bear with us, operator. So the last two points I made were, first that since we don't, So it's hard, since it's really hard to predict what's, what the situation is going to be going forward, we have, we're focused on the things we can control, and I talked about three major areas in order of priority. The first is, adapting to the pandemic and the government measures related to the pandemic and making sure our employees and customers are safe. The second point is to, we've been examining all cash outflows carefully to see where we can further enhance our financial condition and the face of the uncertainties. And the last one is, looking at smaller and larger strategic moves we can undertake to create value for our stockholders and take advantage of our relative financial strength. And longer term, we believe that the coronavirus pandemic will change future business and social behaviors and increased teleworking and social distancing is likely to accelerate a shift to heavy telecom and data reliant activity, which we think plays well for both our established and emerging businesses. So I think, we've now covered the glitch, hopefully we have and operator, open now for questions please.

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

Just wanted to follow up a little bit on the expected impacts from the coronavirus you're looking at in the International Telecom segment. What percent of I guess the markets that you think will be impacted because of tourism or what percent of those markets are business versus consumer? And is it the dynamic that you expect the businesses to temporarily churn off this or turn off the services while to wafer kind of the economy to rebound or are they on usage based models, why do you expect that impact?

Greg, I don't have a percentage for you except to say repeat what I said, which is the bigger portion of our revenue comes from the consumer or residential side. But, so there is a couple of different things that can happen. So in extreme version via hotel or a restaurant that has no occupancy, right. In some cases, there are some services they're keeping -- going and but in others, particularly, if they're shut down for a prolonged amount of time it may be that revenue from those customers goes away entirely for a period of time. And then, there is the impact on the people who work there, right. So, people who work in restaurants and hotels and other small businesses, die shops, things like that, those will be impacted. I think in the short term, haven't seen it significant and people are very even more reliant on their telecom services in this event. And to counter some of the commercial business that down -- that's gone down and some has already gone down. There have been some increases in other areas like the governments. And then, in several markets we are working with the government to help them put out measures, to set out programs and so on, so both in our managed service side and on the connectivity side. So there may be some offset. But I think the key takeaway is, should be that if there is a prolonged downturn in these markets -- multiple markets like Cayman, U.S. Virgin Islands, Bermuda, a little bit less, but still very important, they really rely on tourism as a major economic driver. So, that's the risk we see.

And then turning to the U.S. telecom, the fixed revenue is really strong this quarter. I mean, I think it was like been averaging like sub 1 million, a little over $3 million this quarter. Could you just talk about what's driving that and is this like a good run rate to build off of here for the first quarter? Thanks.

Say that again, Greg? It was faint, I don't know what's wrong with our connections. Speak from the beginning, please?

It was just around the strength in the fixed component of the U.S. wireless, over $3 million this quarter. It's been, I think sub $1 million for like the last year or so. So I just wanted to better understand the strength you're seeing in that line item and is this a good level build off or a good run rate for that business?

Yes, that level is just good. That is the CAF, a lot -- the majority of that is the Connect America Fund revenue in there. And again that started -- that was not there a year ago. So that started in the second quarter of last year.

In terms of the carrier services part of the U.S. telecom, what percent of that business is fixed now versus variable?

We don't have a percentage, but the vast substantial majority. So, just about that it's the part that's not -- that is variable as relatively small.

And our next question comes from the line of Rick Prentiss with Raymond James. Your line is open.

I missed some of the stuff in between, your voice dropped in and then mine dropped in. First question I've got and first, actually hope you and your family, employees are all safe and well obviously, it's a difficult time for us all and it sounds like you guys are prioritizing things correctly.

Thank you and likewise.

Thanks. From a business perspective, maybe first, what happened in April different than March. Can you give us any kind of color about what kind of magnitude of impacts you've seen knowing that I think a lot of your business actually is seasonal or maybe more skewed towards the winter months and the spring months but just anything anecdotal as far as impact April versus what you were seeing through the first quarter?

I think not major, I would say first of all, but definitely some. So the types of impacts we saw range from the fact that gross adds have gone down in multiple businesses because the selling activity is way down. You don't have customers coming into your stores in most markets for that period, and you, and there were some outbound sales efforts that we had to completely curtail in things like fixed wireless in the U. S. The second thing that happened so, the flip side of that is churn goes down. Right. Because the same thing is happening other way. And I would say net-net-net, there's probably more costs that go down, then go up because of it on the cost side. Other revenues that are impacted or the roaming revenues, for example, in our International Telecom segment, those aren't huge and they wouldn't typically be huge in like the first quarter, but in particular, but those, they are nothing and right now, there's, our customers are not traveling and roaming and nobody's traveling to the places where our networks are in these international markets. And then, so that's a negative impact as well. And I think, the other thing is, there is normally some revenue generated from overage charges and things like that, late fees and so on and those are not there. I mean we've been, first of all, usage on some things certainly mobile is down, so we don't have the overage charges. And then in other areas, we've waived late fees or for those who are affected by the pandemic and there is, and I just think that behaviors have changed a little there. And then lastly, as I said, in answer to before, certain activities customers who are hotels or condos or restaurants, you can see no activity that didn't necessarily have a material impact on the first few weeks of this, but as it grows that could have a more of an impact over time if these markets don't start to open up.

How about from a bad debt or accounts receivable standpoint. Anything that you've noticed there, I know you're going to waive late fees on some of the items, but any larger issue on bad debt or accounts receivables?

We have heavy cash collections. Right. So it's a little tough for us to tell right now, because a lot of the places, they typically pay in cash or they have to find other avenues. So we, I think we'll see more, we probably, it's likely we'll see some more bad debt in the second quarter, but it's hard to put a size on that right now. Just because a lot of people aren't able to actually get to places to pay.

And then, you mentioned the new reporting details, is it possible or have you maybe post experiment on busy earnings week to get like the recast second quarter, third quarter or fourth quarter '19 numbers so we can look at mobility versus fixed versus carrier versus other for the different siloes?

We probably could do that. Let me talk with you guys offline on that well to put it out there somehow, maybe up on the website or something.

And as we think about not just the history, but the drivers and the metrics, you've done a good job giving us some of the international customers and broadband versus data, what kind of metrics should we be looking at as drivers on the domestic side for mobile versus fixed versus carrier?

I think as we talked about a lot of that is fairly fixed, certainly the carrier services side and that's something we need to look at to a point where it becomes material to put additional information out there. I think it's, I think some of the more important stuff from an economic standpoint are not your classic metrics, so it's new enterprise contracts, wholesale contracts. But there are some other areas, certainly you know there's private LTE growth, there may be, I expect that industry will start to do something like square footage under operation or something like that or buildings under operation that some of the DAS providers for example, do. So, we'll look at that. Those things aren't material yet, so we're kind of waiting to see where that goes.

Also noticed that you guys have now differentiate between an EBITDA and adjusted EBITDA for some of the miscellaneous items, what triggered that addition of an adjusted EBITDA versus EBITDA?

These people, I can't understand they're afraid of adjusted EBITDA. I feel like it's just directly, so I just feel like we've had it for too long and we're going to try to get to something that is like everybody knows what it means and everybody calculates at the same way, which is EBITDA and then do the math for them. Give everybody the other piece parts, so they can make the adjustments they like. But, my problem with adjusted EBITDA as you can't compare adjusted EBITDA from one company to another with confidence.

And that actually was my last question, you mentioned that one of the reasons for breaking out the new reporting was industry comps, who do you consider your industry comps as you look at EBITDA, adjusted EBITDA and other things?

Yes, it depends obviously on the segment. In our, and none of them are perfect. So, in our US Telecom segment it's really hard to find a comp, right. Because of the nature of our business and the blend of our business. There is public regional players like, that some of you cover, you cover Rick, but their operation is much more like a lot of our international telecom operations than our U.S. telecom. And in International, there is Lilac as an example, Milicom is an example, but they're also very different because they are much larger and operate and both of them largely have -- their biggest bulk of revenue and cash flows comes from Latin America as opposed to the Caribbean. So, but they -- they're at least somewhat instructive.

Thanks. And again, best wishes for you, your family, and employees as we make it through this difficult time.

Thanks. Our next question comes from the line of Allen Klee with National Securities. Your line is open.

Can you give us an update on your emerging investments and also on the cash flow statement? You showed $2.8 million purchase of strategic investments, so maybe also kind of touch on that. Thank you.

Yes, I don't really have anything substantial to say on the emerging investments. I'd refer back to my comments that some of what's going on, feels like it could slow down a little in terms of momentum, just because it's harder to when you're in that stage to get deals done. Having said that and for example in private LTE, we continue to make progress with some customer discussions and items there. So right now, we think it's may be slowed down, what we would hope to see happen in this year but not derailed it, I would say. And in other areas we've made some good progress, put some additional -- provided some additional funding in Australia to the tower business there and we've seen some tangible progress there, but it's still early stage in terms of scale and scope compared to the rest of our business. So I think, I'll wait to have bigger, bigger events to provide more detail.

And the number you're referencing, was an additional investment in the Australian operations.

And in International Telecom, is there a way to think about how much of your revenue typically comes from tourists that are visiting?

Not a lot of our revenue comes from tourists, Allen, it's more indirect. So, the wireless roaming revenue does come from basically from those tourists, although it's -- we get paid for less than I suspect they pay their carrier. But it's really the indirect impact that I talked about, right. So, it's our customers who serve the tourists or work for businesses that serve the tourists. We saw the back in the financial recession, which was nothing like this in terms of uncertainty and shut down of activity, but it did. There was a market downturn in tourism to those areas during that period and we could see that. It wasn't -- it didn't have a major impact on us because things basically stayed open. And so, that's the uncertainty is that businesses don't last or can't they open, then there'll be more impact on us.

My last question is on Domestic Telecom. Besides CAF II and FirstNet, is there anything else that's impacting the business or you expect to impact the business that's supporting better results than what you had before, or the other side of it?

Well, I think we solidified more than just FirstNet on the wholesale side, on the carrier service side, so that, as we said, we feel fairly good about those numbers. There are some pieces of that, that are still variable but we don't really see we probably think there's a little more upside potential there than downside. And then, on the other side of the business and some of the things I referred to before, it's some enterprise sales and things like that, that we think could again probably have more upside potential than downside because it's a small but growing piece of that business, and I would say the same is true of the fixed broadband service, which we do with the fixed wireless solution.

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

So first question I had was, what kind of growth are you expecting this year that you're termination expense was higher in Q1?

Say that again, Hamed?

Your termination access expenses were higher in Q1 of this year. And the trend is, it's changing up on the trends here. So I'm just trying to get a understanding as what kind of data or voice kind of growth are you expecting that you're spending more?

It's just, it's really increased data use. Right, So, as we in multiple markets where you've seen the broadband subscriber growth there's been other data service growth in that, so that increases are backhaul requirements and I think that's, so I think that's the major piece of it.

And then the other question I had was in Guyana, just given the elections over there. Are you comfortable with the current climate?

Comfortable with the current climate?

The election climate, yes.

In Guyana?

Yes.

No, don't think it's great for the country right now, the delay in a final and accept the election results, don't think that's a great outcome. I think, IMF and others are still predicting fairly strong growth even in the face of the Coronavirus this year in Guyana, but that's less so than they thought. I definitely think there's political uncertainty, slow foreign direct investment. It hasn't slowed Exxon by all reports, and they've said that in their recent earnings call, but a lot of the other related sort of triggered benefits, I guess of the oil development I think is inhibited a little bit by that.

And Hamed, just to expand on your question. The other, the first part of the question, so probably, if you're looking at the comparison of year-over-year quarters in the termination and access in '19, we had some one-time kind of credits that were going through there that, that artificially made it lower. So it's not necessary up off of that year. It's just '19 was lower.

And then last question I had was regarding the U.S. business. Is that all really FirstNet just using the current network structure, are you adding some towers to help grow that business right now with FirstNet contract?

No, just using the current network. We're not expanding network. We will spend some money on infrastructure in terms of backhaul in towers, is part of that deal, but the traffic right now is on the existing network.

Thank you. And I'm not showing any further questions. I'll now turn the call back over to management for closing remarks.

Okay, thank you everybody. Thanks for joining us, be well and we will see you in another quarter.

Ladies and gentlemen, this does conclude the program. You may now disconnect. Everyone have a great day.