Thank you for standing by, and welcome to ATN International's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Justin Benincasa, Chief Financial Officer. Please go ahead.

Thank you, operator, and good morning, everyone. This morning, we'll be reviewing our fourth quarter and full year 2023 results and providing additional insights on 2024. I'm joined today by Brad Martin, ATN's Chief Executive Officer; and Carlos Doglioli, ATN's incoming Chief Financial Officer; and Michael Prior, ATN's Executive Chairman, who will be available for the Q&A portion of the call. As a reminder, we announced our 2023 fourth quarter and full year 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 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 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 at atni.com, or the 8-K filing provided to the SEC. And now I'll turn the call over to Brad.

Thank you, Justin. Good morning, everyone, and thank you for joining us. It's a pleasure to be here for our first earnings call as ATN's CEO. I'll begin covering highlights from our Q4 and fiscal year 2023 performance and progress executing our strategy. Following that, Justin will review our financials in more detail and provide an update on our 2024 guidance. This is a significant time in ATN's journey. We've entered the third and final year of our strategic investment plan to expand the reach, capability of our high-speed networks and to bring more high-speed data services to remote and underserved consumers and businesses. The investments we are making position ATN to continue delivering high-quality, reliable services to our customers, while providing a solid foundation for growing high-speed data subscribers and recurring revenues, expanding free cash flows and delivering sustainable value creation for our stakeholders in the years ahead. As a result, ATN today is a stronger, more resilient company. We concluded a solid 2023, with a strong fourth quarter, executing on our First-to-Fiber and Glass and Steel investment strategy. Our continued conversion of customers to our high-speed networks and focus on margin improvement contributed to subscriber growth, higher revenue and margin expansion. In fact, both the quarter and the year, we achieved single-digit revenue growth and double-digit expansion of adjusted EBITDA. Justin will expand more on our financial results shortly, but first, I'd like to start with 4 key points that frame our 2023 performance and the opportunities ahead for ATN. First, in 2023, we executed several important strategic milestones that are key to our success going forward. We advanced our First-to-Fiber and Glass and Steel investment strategy by adding fiber-rich digital infrastructure in the markets we serve. In May, we announced our long-term agreement with Verizon. We have…

Great. Thank you, Brad. ATN's strong fourth quarter and full year performance reflects our team's hard work executing against our 3-year strategic investment plan. In 2023, we achieved consistent top line growth and even stronger adjusted EBITDA growth, well in line with our guidance for the year. Turning to the P&L highlights. In Q4, total company revenue of $199 million grew 4% before construction revenue compared with the same period in 2022. Higher fixed revenue was driven by growth in rural broadband revenue and high-speed data subscribers. The quarter also benefited from $3.1 million of nonrecurring revenue associated with engineering services we provided on a fiber deployment. For the full year, revenue totaled $762.2 million. This represents a 6% increase over the prior year, excluding construction revenue from both periods, reflecting the momentum of our strategic network investments. Operating income in the fourth quarter was $3.3 million versus $4.7 million in Q4 of 2022. The year-over-year decrease was due to a $6.6 million restructuring charge related to our ongoing efforts to better align our cost structure to the future needs of the business, and a $1.3 million net loss on the disposition of assets and changes in contingent considerations. Full year operating income for 2023 increased to $13.2 million, which was negatively impacted by restructuring charges of $11.2 million. This compares to operating income of $7.9 million in the prior year. Adjusted EBITDA growth was exceptionally strong for both the fourth quarter and the full year, increasing 13% to $51 million for the quarter, and 10% to $189.5 million for the full year. This performance was fueled by strength across both segments as we benefited from higher revenue and our ongoing margin expansion initiatives. Net loss in Q4 was $5.8 million, or a loss of $0.46 per share, compared with…

Thanks, Justin. Hello, everyone. It is an honor to be here today. ATN is a solid company that has been investing in the foundation for the continuing creation of shareholder value. Since joining ATN in January, I've been impressed with the thoroughness of ATN's finance team, the strength and experience of the leadership team and the clarity of the organization's mission and strategy. I am grateful for the quality time that I have spent with Justin. I look forward to building on the disciplined financial foundation he has established to continue to generate value for our investors and stakeholders for years to come. I look forward to meeting with many of you in the months ahead. And with that, I turn the call back over to Brad.

Thanks, Justin and Carlos. We are very excited for ATN's future. Through our First-to-Fiber and Glass and Steel investment strategies, and ongoing focus on margin improvement, we are laying the foundation for durable long-term growth in the years ahead. The ATN value proposition continues to resonate with customers around the globe. Our teams remain energized, execute on our promise to help rural and underbuilt communities advance their quality of life through reliable, high-quality digital connectivity. With that, operator, we'd like to open up for questions.

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

Yes. Justin, I wish you well in retirement. We enjoyed working with you. And Brad and Carlos, look forward to getting to know you guys better.

Thank you.

Thank you.

First question, Justin, you called out that you've got this COVID program that's expiring in 1Q '24. Can you remind us what line item is that revenue and domestic. How much was that in '23? And how much will it be in 1Q '24? Because obviously, it's affecting the revenue growth rate in '24 versus '23?

Yes. It's a fixed revenue, so it's reported in fixed. It's been a pretty consistent number to the number we gave. So it's a $27 million program, and it's kind of pro rata over the quarter. So we'll have a pro rata amount Q1 then it will drop off. So it's roughly a $21 million impact next year.

The $21 million for 3 quarters worth of '24 is what it would be down.

Correct, right. So we'll have it in Q1, but then it drops.

Right, right. Okay. And is that a super high-margin business loan? Just wondering how that effect was into EBITDA?

Yes. I mean it's a kind of for in our guidance. It did have a significant cost that came with it -- COGS that came with it, but it did have margin.

Okay. Because when we think about -- and we can normalize for that now, obviously, you said to put $21 million in there. The revenue growth rate from '23 to '24 seems somewhat muted. Can you help us understand, you've spent all this CapEx. You've got these exciting ads to high-speed broadband in both of your regions. How should we think about kind of where you want to head with revenue growth on a more normalized basis absent this COVID program?

I still think, Ric, that we can be in the range that we guided to a while back, right, in the 4% to 6% range of revenue growth. This year, the drop in that ETF program definitely muted it, though, obviously.

Okay. And then, Brad, you touched on margin improvements a couple of times in your comments. What should we think of is -- what's the target you want to get to? And is it varied between domestic and international? Where should we think you're trying to drive this boat to as far as margin improvement?

So thanks, Ric. So great question. It's obviously a key area of focus for the business. The current guidance on -- that we provided for 2024 includes a lot of these initiatives. Look, we always are measuring ourselves against benchmarks in the industry, but we are guiding beyond that. And I think where we guide to '24 is a reflection on a continued focus that started through my course and my tenure here, my operational role and will continue to be a key focus for the business as we move forward.

So the guidance for '24 kind of assumes that maybe a 27% margin?

Yes. Yes, using the midpoint, I think, on that. And I would just say, too, it's in both segments, Ric, just kind of we're working on.

Okay. Last question for me then. On the CapEx, obviously, getting back to more normal levels in '25, somewhere between 10% and 15% of total revenues ex-construction. What would cause it to go to the low end of that range, what would cause it to go to the high end of the range? And obviously, I think that assumes that any government funding is separate and that gets netted out.

Yes. So great question, Ric. And you specified the range. The major dynamics that move CapEx timing are really around success in the year. We do have markets where the markets we serve can be very complex to plan some of the timing because of complexity due to weather, for example. But a big mover is the timing on the grant -- already awarded grant programs that come in to the business. So those can move specifically by state, by program. It does vary significantly. So that potentially could drive it to overall lower level, but it would be really specific to each individual market.

Our next question comes from the line of Greg Burns of Sidoti.

When you look at the broadband penetration homes passed versus subscriber growth, the subscriber growth is lagging the homes passed growth by a little bit. Can you just talk about maybe your plans for marketing promotion, any activities or programs you might have in place to continue to increase that broadband penetration?

Yes. Great. Thank you. Great question. So certainly, penetration, as quickly as possible, is always the core focus on any infrastructure build generally, we have -- we look at every single situation competitively, the different types of products, different types of competitive solutions across the portfolio. So we are everywhere looking at how do we move the needle more quickly. We find a presell, and I mean we certainly tried to leverage as many techniques as possible to shorten that timing, but it does vary significantly market by market based on those competitive dynamics and the technology. But we are coming off a significant investment phase, and growing that base of homes passed provides us a great opportunity to continue to expand.

Okay. And then in Guyana, there's some saber rattling going on down there. What is your exposure there to maybe the disputed regions? And maybe, I guess, what the risk is to you that maybe something escalates in that region?

Yes. I will start on that answer, and Michael who's been closest too, can chime in. Generally, this is something we obviously watch very closely. It's something that we stay very close to the other major U.S. investors in that market and the Exxon CEO spoke to this in their earnings call as well. and spoke to the fact that they think it's a general low risk, but it's something that's watched very closely. And we make sure that the teams are aligned. The general disputed area is an area where very little of our infrastructure resides. It's a very unpopulated portion of Guyana. But it's something we're watching closely as things develop. And we're certainly making sure we have our teams aligned around what we effectively are monitoring with our governments and our business partners. Michael any thing to add to that?

Yes, this is Michael. I don't think there's much to add. I would just emphasize that it's really around interruption for Guyana, which we certainly don't hope and we don't -- we hope that there's nothing like any kind of even minor military action. We don't get the sense that, that's likely from everyone we talk to, but who knows. But the point is that from a pure economic and business standpoint, as Brad said, really all of our operators very, very little is in that region that Venezuela is claiming.

Our next question comes from the line of Hamed Khorsand of BWS.

So first off, I just want to ask you, there was a sequential bump in U.S.-related revenue by about $7 million or so, how much of that is -- you're able to retain going forward? I understand there's that grant money is coming off in Q2. But outside of that, how much of that is realistically able to hold on to?

Hamed, there was an engineering service revenue, right, that I spoke about in my part of the opening of about $3 million. So -- but I think generally I think a lot of that's sustainable, but for the fact of the ECS drop-off that I noted as well.

Okay. And then could you provide a little bit more details about the restructuring down that you took, and why you decided that you had to take it down?

Yes. The restructuring was really kind of cost reduction initiatives, right, in terms of workforce and leases and things like that, that we took off. So there it predominantly is all onetime charges associated with exiting those costs. That answers your question.

I guess I was asking why now? What was the impediment to do it now?

It's really a part of the initiative to just kind of more efficiently run the business and improve the margins.

Got it. And my last question was, last earnings call, you were talking about the churn going up in mobile, that came down. What was the result of that as far as the improvement you've seen? Is that because of better marketing, the consumer there is happy with the mobile service they have and the mobile phones they have? I know in the past, you've talked about that they have 2 phones, and now they're back to 1.

Yes. Hamed, I'll take that. Generally, there was a dynamic this year in 1 of our significant prepaid markets where there was a competitor that came in with a free offering with new network, a much smaller competitor. That did have an impact -- it did effectively have some positive impact for subscribers on data consumption. So that was 1 of the dynamics that was effectively a 6-month free promotional period. So that is something that, that promotional period has ended.

Congrats Justin on the retirement.

Thank you Hamed.

[Operator Instructions] Our next question comes from the line of Rick Prentiss of Raymond James.

We'll give a few more questions here on your last call. Did you all have any exposure to the ACP program? Is that what you're referring to in the COVID one? Or what was your exposure to ACP?

Ric, that was not what we're referring to as the COVID. That was a different program called emergency connectivity Fund. ACP, we are watching this closely. We do have some exposure to the ACP. It's not a huge overall to ATN. We are still working to quantify the overall impact in options to help mitigate it.

Okay. Do you know how many subs you have sort of ability to kind of show us what that ballpark number is?

Yes. We haven't given that, Ric, yet. I think we probably just more time for us to quantify it.

Yes. And the anticipation is that it might stop April, right?

Yes, I think that's -- yes, yes.

Yes.

Okay. And other question for me is free cash flow looks like we're there on the cusp of turning the corner to be positive free cash flow. Can you talk a little bit about maybe cash taxes and interest, which would be the other items compared to EBITDA and CapEx. But are you feeling pretty good that maybe even early this year, you get to that free cash flow positive dynamic? And then what kind of progress from there?

Yes. I mean we're definitely striving to increase free cash flow, right? We've been repeating that message over and over. And I think in terms of interest -- so with that kind of our priority items to keep driving down leverage that will help on the interest cost. I think in terms of interest expense, you've kind of seen that in the quarter, that's kind of a decent working number. Our cash taxes for better or for worse these days are pretty limited. But our goal is to keep expanding that free cash flow, bring down leverage, return it to shareholders.

Okay. And we don't usually include in our valuation free cash flow, but are there any unusual working capital items coming up?

There is nothing out of the ordinary, but we are watching, like with the government reimbursement programs. So we've got some working capital already tied up in those programs, right, as we go through the replace and remove. But we're watching that. We're trying to manage that closely, but that could be a little bit of a -- there's some work for us to not grow that part of the working capital too much. But it's out there because we have to -- kind of have to expend it before we get reimbursed.

What's the lag as far as from spending to reimbursement? Is that 6, 9 months? Is it...

I don't know. It's probably in a shorter period than that.

It does vary by program, Ric, but we have seen much better than that. But some of these programs, certainly, the more sizable ones require a lot of details for those reimbursement. So -- but it has been measured in weeks, which is good. And there have been some programs that allowed for pre-positioning, giving effectively a 6-month prepositioning of invoicing.

And the trick for us is to try to manage how fast we're constructing and seeking reimbursement too, right? So it's -- there's a lot of management involved in it, obviously.

Yes.

It's worth adding to that just that we've also entered into agreements on some of the big vendor contracts that you get paid when we get paid kind of thing.

Yes.

And a lot of your reimbursement probably coming from states instead of the U.S.

It is mostly U.S. Federal government, but there are some states as well.

The ones we're working on now.

Right, right. Right. Okay. If our government can get something done in weeks, that's -- all right. And the last 1 for me is just the leverage guidance changed a little bit. Previously, it was get to approximately 2x by end of '24, and now it's kind of the 2.25x to 4.40x. We were at 2.2x anywhere in our model. Was that just kind of a fine-tuning of kind of the -- when you get to that closer to 2x range? Or is there anything specific different from prior guidance and now?

No, it's probably I think it's just a little bit of fine-tuning how much working capital we might have tied up in some of the reimbursement programs, so that's where the fine tuning was.

Justin, again, best wishes.

Thank you, Ric. Appreciate it. Thanks for all the support over the years.

As there are no further questions in queue, I would now like to turn the call over to Brad Martin, ATN's Chief Executive Officer for closing remarks. Sir?

Thank you, operator, and thank you all for joining us today. We will be participating in Sidoti's small-cap Virtual Investor Conference on March 14. We look forward to meeting with many of you there. I would like to take a moment to thank Justin for his leadership and his commitment to long-term tenure to ATN. I wish you all the best in your retirement.

Thank you, Brad.

And thank you again for your time. With that, operator, I'll turn it back to you.

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