Good day and welcome to the Cable ONE CABO Earnings Report Q4 2016 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there'll be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Kevin Coyle, Chief Financial Officer. Please go ahead.

Thank you, Operator. Good morning everyone and welcome to Cable ONE's full year and fourth quarter 2016 earnings call. We're excited to have you with us this morning as we review our results. Before we proceed, I'd like to remind you that today's discussion may contain forward-looking statements relating to future events and expectations. You can find factors that could cause Cable ONE's actual results to differ materially from these projections listed in today's press release and in our recent SEC filings. Cable ONE is under no obligation, and in fact expressly disclaims any obligation to update its forward-looking statements whether as a result of new information, future events, or otherwise. Additionally, today's remarks will include a discussion of certain financial measures that are not presented in conformity with U.S. Generally Accepted Accounting Principles. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures can be found in our earnings release or on our website at ir.cableone.net. Joining me on today's call is our President and CEO, Julia Laulis. And with that, let me turn the call over to Julia.

Thank you, Kevin. Good morning and thanks everyone for calling in. I'm pleased to review several items to do today, and as a general overview, I intend to share Cable ONE's annual results, our fourth quarter results as well as some information about our previously announced acquisition of NewWave Communications. I plan on touching on a few highlights and then Kevin will provide a full recap of our financial performance and get into more details regarding the expected increase on our capitalized labor costs beginning in 2017, which we mentioned in our earnings release. Before getting into results, I want to take a moment to share a bit of my background that this is my first call since becoming CEO. I've been with Cable ONE for more than 17 years. Most recently as President and Chief Operating Officer, I worked closely with our Executive Chairman, Tom Might during that time. I'm looking forward to continuing his legacy of strong and innovative leadership. As CEO, I intend to maintain our heritage of pursuing long-term success for our associates, customers, and shareholders; by cultivating our unique strength, one of those been execution. To that end, I'm proud to be to lead our adaptive and dedicated associates as we continue our strategic shift towards being residential HSD and business service focused company. So, first, our 2016 results; 2016 was our first full year as a standalone public company. I believe our strong annual results reflect the execution of our strategy as well as our focus on growing adjusted EBITDA and margin, while intelligently managing our capital expenditures. We grew total revenues by 1.5% in 2016 compared to nearly 1% reduction in total revenues the prior year. So, we've passed the tipping point back to generating annual revenue growth. Our product mix change reflects…

Thanks, Julie. As Julie already mentioned, we are very pleased with the results that we've achieved during 2016. First, let me share a few highlights from the year and the fourth quarter. For the full year, adjusted EBITDA grew by 10.3% with a margin of 42.8%. Adjusted EBITDA less capital expenditures was $225 million, an increase of almost 49%, residential HSD revenues increased by nearly17%, business services revenues increased by 13%. Residential HSD and business service revenues comprised now more than 54% of our total revenues for the year. And total revenues were almost 820 million compared to 807 million in 2015. For the fourth quarter, adjusted EBITDA increased by 0.7% year-over-year with a margin of 42.9%, keep in mind that this increase was affected by the positive net impact of 2.3 million of certain insurance and other related benefits we've had in the fourth quarter of 2015. Excluding the impact of these unusual benefits, which we highlighted last year, adjusted EBITDA would have increased 3.4% year-over-year. Adjusted EBITDA was capital expenditures for the fourth quarter were 54.4 million, an increase of almost a 161%. Residential data revenues increased by nearly 13%, business services revenues increased more than 14% and now residential data and business service revenues comprised over 55% of our total revenues. Total revenues for the quarter were 207 million compared to 203 million in Q4 of last year. Now getting into the detailed results, for the full year 2016 compared to the full year 2015 revenues grew by 12.4 million or 1.5% with increases in residential data and business service revenues more than offsetting the decreases in residential video and residential voice revenues. Residential data revenues increased 49.7 million or almost 17% due primarily to a rate adjustment taken in the fourth quarter of 2015 and increase…

[Operator Instructions] Our first question comes from Philip Cusick with JPMorgan. Please go ahead.

A few if I can, first, congratulations on the NewWave deal. It looks like a great deal on a lot of measures. Can you talk first about the demographics and those markets and how the Cable ONE philosophy on video pricing and broadband pricing and promotion sort of fits or doesn’t fit in the near markets. And then second can you talk about the decision may have had with the board about the dividend, given that leverage still would be fairly low and you’re generating lot of cash, and I'm little bit surprise you didn’t take the dividend up today, any reason that that didn’t happen or was it not even in the discussion? Thanks.

Phil, this is Julie. So, talking about demographics and the NewWave's area, NewWave, as we said is like a many Cable ONE, they are about quarter of our size and there markets are very similar to the one that we operate in. They kind to be may be a little bit smaller but they very closely match up, they are also the team that in NewWave, a great team has gone out with a similar strategy to Cable ONE and they are focusing primarily on residential, just the and business services and pushing growth in that area. I don’t think we’re going to comment on how Cable ONE is going to priced and deal with their promotions at this time, but we feel like we're positioned very well to capitalize on the work that the NewWave associates have begun. Kevin, do you want to mention anything?

Your question on -- this is Kevin. Your question on dividend, I mean the Board and management continually look at all forms of capital allocation whether it'd be dividends, stock buybacks or M&A, obviously that we just mentioned. But we will continue to look at a quarter to quarter and we wanted to be disciplined in our approach to all three measures, but I really can't comment in terms of where we go with dividends, we feel comfortable where we are right now. We continue to review it on a quarter to quarter basis.

Our next question comes from Craig Moffett with MoffettNathanson. Please go ahead.

Hi, this is actually Cathy Yao for Craig. Julie and Kevin you mentioned that, you took your rate outside $6 to $8 across your footprint in January. So does that suggest that going forward you're planning to take up more rate increases across your entire footprint on a more regular basis, once a year versus once every five years? And then within broadband more specifically, would you able to disaggregate your growth expectations between higher speed uptakes versus rate uptake? And then as a follow-up to broadband, I was wondering whether a more deregulatory environment would allow you to be more aggressive in your usage caps going forward? Thanks.

Thank you. This is Julie. To clarify the $6 rate adjustment would take in on video customers in January approximately $8 rate adjustment was taken on some business in video customers starting in February. When it comes to rate adjustments, our strategy is to pass along all video cost increases. We will not have on other products subsidizing video. I don't think that you could draw a conclusion about what we're going to do with other rate adjustments going forward. As a matter of fact, we've only raised HSD rates once since 2011, and we've never raised our phone rates, but again we'll continue to pass along all video cost increases as that is part of our strategy. As far as disaggregating the HSD growth, I don't think I'll comment to that. Deregulatory, well, I think we're all looking and waiting to see what will happen both with the Trump administration and possible tax changes and the new FCC and Ajit Pai. We've an established relationship with him and we look forward to seeing what happens to Title II.

[Operator Instructions] The next question comes from Stephan Bisson with Wells Fargo. Please go ahead.

I had a couple of it. First, on the synergies for the NewWave acquisition, are specifically 24 million annualized, when should that run rate begin? And then on the capitalized labor, if we were to look at that $30 million and kind of pro forma 2016 you guys would be closer to 20% on capital intensity, is that how we should think about the new CapEx side going forward?

On the synergies, as we said when we announced the NewWave deal, we believe that the synergies would be in the range of 24 million and it comes from three different areas, from corporate overhead, from reduced programming costs, and other operational savings, obviously their margins are far lower than ours are, because of our size. These synergies will be realized over time, some will be more immediate. Some could take a couple of years. For example programming savings would be realized as certain programming contracts come due whereas some corporate overhead savings are expected to be more immediate. So, it's going to range depending on what kind of savings we're -- we think we're being fairly conservative in our estimate here, but it'll be overtime. In terms of our capitalization, I think you can do the math, yes, if we had applied that range to our existing results in 2016, our capital as a percentage of revenues would have been higher. We ranged right where we told the market at 15%, a 125 million of capital, but if you want to add 30 million to that, I think you can do the math.

And that decent run rate kind going forward, if you were to kind think about that?

We hesitate to give guidance at the moment on that. We’re taking the look at NewWave and a lot of things that are going on. And again, you will start to see the synergies where the capitalizations take effect in the first quarter of 2017. So when we get around to seeing the actual change on capitalization in the first quarter and get a better sense on NewWave exactly where we're going to be, I think we will give some guidance. But I'm really reluctant to give guidance right now on that.

It appears that at this time we have no further questions. So, I would now like to conclude the question and answer session and turn the conference back over to Julia Laulis for any closing remarks.

Thank you, operator. I want to thank all of our Cable ONE associates for their commitment and carrying, each and every one of you contributed to making 2016 a very successful year for Cable ONE. We appreciate you joining us for today's call, and we look forward to speaking with you again next quarter.

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