Cable One, Inc. (CABO) Q4 2021 Earnings Report, Transcript and Summary

Hello and welcome to today’s Cable One Fourth Quarter 2021 Earnings Call. My name is Elliot and I will be coordinating your call today. [Operator Instructions] I would now like to hand over to our host, Steven Cochran, CFO. Please go ahead.

Thank you, Elliot. Good afternoon and welcome to Cable One’s fourth quarter and full year 2021 earnings call. We are glad to have you join us as we review our results. Before we proceed, I’d like to remind you that today’s discussion contains forward-looking statements relating to future events that involve risks and uncertainties. You can find factors that could cause Cable One’s actual results to differ materially from the forward-looking statements discussed during today’s call and today’s earnings release and in our recent SEC filings. Cable One is under no obligation and expressly disclaims any obligation, except as required by law, to update or alter 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 or GAAP. Reconciliations of the 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, Julie Laulis. With that, let me turn the call over to Julie.

Thank you, Steven and good afternoon everyone. We appreciate you joining us on today’s call. The fourth quarter of 2021 completed one of our strongest organic growth years on record. Excluding the impact of our Hargray acquisition, revenues and adjusted EBITDA for 2021 increased by 5.6% and 11% respectively on a year-over-year basis. And adjusted EBITDA margin was 53.5%, which is a 260 basis point increase year-over-year – over prior year. Our full year results, including Hargray operations produced a 21.2% year-over-year increase in total revenue, a 24.5% year-over-year increase in adjusted EBITDA and an adjusted EBITDA margin of 52.3%, which was 140 basis point improvement year-over-year. Our unique and at times contrarian strategy has paid dividends as evidenced by our success since becoming a publicly traded company in 2015. Contrarian, because of our pivot from video to focus on broadband years in advance of our peers and unique, because of our rural footprint who chose to operate in and the way in which we approach acquisitions and investments. All of this and more has resulted in strong financial results each year since 2015. In 2021, demand for our residential HSD product continued to outpace pre-pandemic trends exceeding our projections. Driven by continued strong connects and low churn and strategic M&A activities, we added approximately 180,000 residential HSD customers year-over-year, an increase of 23.2%. Excluding the acquisitions we closed throughout the year, we added approximately 50,000 residential HSD customers, representing an organic growth rate of 6.4%. While our expectation is that we will eventually return to pre-pandemic growth rates, our HSD penetration rate of 38.7% at year end illustrates not only how far we have come with the opportunity that still lie ahead. As of January 1, less than 28% of our markets had a competitor who offers residential broadband download speeds of 100 megs or higher. This relatively small increase in competition across our footprint came about primarily as a result of our acquisitions. As I have said before, we run our business as if every market is highly competitive, offering superior products and services and maintaining a local focus on customer needs. During a time when some are pointing to an increasingly competitive broadband marketplace as a negative for all internet service providers, we achieved our second best year in terms of organic customer growth. Demand for our premium HSD products also reached a new high last year. During the fourth quarter, nearly 4 out of 5 new customers selected the speed tier at or above 200 megs. Our gigabit products, which we began offering nearly 6 years ago, is available across approximately 99% of the markets we serve. Selling to this service has more than doubled since 2020 to over 14%. These new sales, combined with upgrades of our existing customers and the offering of unlimited data resulted in full year HSD ARPU growth of 5.5% in 2021. As demand for faster speeds continue to grow, we continue to evaluate our suite of service offerings and make adjustments designed to better align with customer needs and behaviors. Because our 200-meg offering has become the most demanded plan near the end of the first quarter, we will be discontinuing our 100-meg speed tier and migrating those customers to our 200-meg speed tier, at an initial increase of $5 more per month. We believe we are ensuring an experience that lives up to our customers’ expectations while also maintaining a great value proposition. Turning to our network, although average data usage increased year-over-year to nearly 550 gigabits per month, our downstream and upstream utilization during peak hours was just 20%. We understand how essential network reliability is and these continued results are yet another example of our ongoing investment and commitment to providing a reliable customer experience. As we look into business services, a look into business services shows the model of resilience with revenues increasing each successive quarter in 2021 and finishing the year with growth of 31.6% year-over-year or 8% when excluding both Hargray and Anniston operations. I’d like to round out discussing another quarter of strong growth by turning to the results of our minority investments, where residential HSD and business data customers grew by approximately 13,200 on a sequential basis from Q3. While these new customers are not reported in our results, the continued growth of these businesses highlights the value of our strategic partners to Cable One. Keep in mind that point broadband net adds are now included in this figure. Moving to M&A, on December 30, we closed on our previously announced acquisition of CableAmerica, a data, video and voice provider in Central Missouri, for $113.1 million in cash on a debt-free basis. As we bring CableAmerica into our family of brands, we look forward to learning from our new associates as well as building on best practices from our prior integration. Additionally, at the beginning of January, we closed on a joint venture transaction in which we contributed certain Clearwave and Hargray fiber assets to a newly formed entity, Clearwave Fiber. Clearwave Fiber intends to invest heavily in bringing fiber-to-the-premise service to residential and business customers across its existing footprint and in near adjacent areas. With this joint venture, Cable One will not only have trusted leadership and equity partners to accelerate fiber-to-the-premise investment opportunities at Clearwave Fiber, but we should also benefit from improved free cash flow at Cable One. The time and effort spent on Clearwave Fiber is directly correlated with our ongoing integration process for Hargray. Our teams worked diligently throughout the quarter to identify resources and platforms best suited for the new entity. As mentioned previously, we believe this joint venture has the potential to accelerate cost savings associated with the Hargray integration. While we are prioritizing the Hargray integration, Fidelity remains ahead of our original run-rate cost synergy estimates laid out at the time of the acquisition. Before handing the call over to Steven, I’d like to thank associates across our family of brands for another outstanding year. Together, we continue to face pandemic challenges, manage unprecedented HSD growth and work to complete a multitude of projects, all with an eye on improving the customer experience. Our associates have no equal in fulfilling our purpose of keeping our customers and communities connected to what matters most. They are truly the heart of Cable One and the reason for our ongoing success. We continue to focus on creating a workplace in which our associates feel valued and included and we were honored that our associates recognize that commitment to our recent ranking on the Forbe’s list of America’s Best Midsize Employers as well as in the results of our Annual Associate Satisfaction Survey. Our associates gave highest marks for taking associate safety seriously and pride in working for Cable One. Responses to both surveys illustrate that our associates believe in our purpose and are committed to our organization and to serving the communities in which we live and work. As a reminder, at our upcoming Investor Day, next Thursday, March 3, you will hear even more from senior leadership and our Lead Independent Director, Tom Gayner, about Cable One’s rich history, what makes us different and the significant opportunities that still lie ahead. And now, Steven?

Thanks, Julie. Now, let’s turn to our fourth quarter results. Revenues for the fourth quarter of 2021 were $432.6 million compared to $336.8 million in the prior year quarter, a 28.5% increase. The increase, which included $77.8 million of revenue from Hargray operations, was fueled by a residential HSD increase of 27.6% and a business services revenue increase of 46.2%. Excluding the Hargray operations, our fourth quarter total revenue increased by 5.3%, residential HSD revenues increased by 11.3% and business service revenues increased by 8.3%. Residential HSD PSUs grew by approximately 22,000 on a sequential basis from the third quarter, with approximately 14,000 acquired in the CableAmerica acquisition. Operating expenses were $119.9 million or 27.7% of revenues in the fourth quarter of 2021 compared to $99.4 million or 29.5% of revenues in the prior year quarter, a 180 basis point improvement driven largely by the increase in programming cost. Selling, general and administrative expenses were $94.9 million for the fourth quarter of 2021 compared to $64.7 million in the prior year quarter. These expenses were 21.9% of revenues in the fourth quarter of 2021 compared to 19.2% of revenues in the prior year quarter. Net income in the fourth quarter was $64.8 million, which included an $8.9 million non-cash loss on fair value adjustment associated with the call and put options to acquire the remaining equity interest in mega broadband investments. As a reminder, the MBI options are subject to mark-to-market accounting on a quarterly basis. Until these options are exercised or expire, any changes in the assumptions used to determine the fair values could increase or decrease the resulting valuation, which in turn could cause significant non-operating fluctuations in our GAAP financial results from one quarter to the next. Net income per share on a fully diluted basis was $10.54 per share, inclusive of the non-cash loss just mentioned. Adjusted EBITDA was $225.3 million for the fourth quarter, an increase of 25.9% from the prior year quarter or 7% when excluding the impact of Hargray operations. Our adjusted EBITDA margin was 52.1% or 54% when excluding the impact of Hargray operations. Capital expenditures totaled $109.9 million for the fourth quarter of 2021, which equates to 48.8% of adjusted EBITDA. During the quarter, we invested $23.6 million of CapEx for network expansion and $7 million for integration activities, bringing our total for the year to $76.2 million and $16.3 million respectively. Adjusted EBITDA less capital expenditures was $115.4 million for the fourth quarter, an increase of 11.3% from the prior year quarter. In the fourth quarter of 2021, we distributed $16.6 million in dividends to shareholders, bringing the total distribution for the year to $63.5 million. From a liquidity standpoint, we had approximately $389 million of cash and cash equivalents on hand as of December 31 and we continue to generate significant free cash flow. At quarter end, our debt balance was approximately $3.9 billion, consisting of approximately $2.3 billion in term loans, $920 million in convertible notes, $650 million in unsecured notes, $6 million of finance lease liabilities. We also had approximately $460 million available for additional borrowings under our revolver as of December 31. Overall, our debt to last quarter annualized adjusted EBITDA after netting cash on hand against debt was 3.9x as of December 31. During the quarter, we also made three equity investments, received a dividend and closed an acquisition. On October 1, we made a $25 million investment for a less than 10% equity interest in Point Broadband Holdings LLC, a privately held Internet services provider serving residential and business customers in rural and suburban areas of 10 Eastern United States. On October 18, we completed a minority equity investment for less than 10% ownership interest of Tristar Acquisition I Corp., a special purpose acquisition company for $20.8 million. On November 5, we invested an additional $50 million in Nextlink, increasing our total investment from $27.2 million to $77.2 million. And on December 28, we received a $68.7 million dividend related to our investment in MBI. Given the significant growth in deleveraging during our first year of ownership, they were able to complete a dividend recapitalization, taking their leverage back to 6.2x. And on December 30, as Julie discussed earlier, we acquired certain assets and assumed certain liabilities from CableAmerica, a data video and voice services provider in Central Missouri for $113.1 million in cash on a debt-free basis. Additionally, as Julie mentioned, on January 1, after the quarter ended, we closed on the formation of Clearwave Fiber joint venture, which is intended to accelerate deployment of fiber Internet to residents and businesses in the relevant markets. As a reminder, Clearway Fiber will be deconsolidated from our operating financials beginning with the first quarter of 2022, and our investments will be reflected in Cable One’s financials under the equity method of accounting. The fourth quarter of 2021 revenue and CapEx associated with the operations contributed to Clearwave Fiber were approximately $7.8 million and $17.2 million, respectively. A couple of other items I want to discuss before we take questions. First, I wanted to make note of the timing of our rate changes. Our annual video rate adjustment will be implemented in March this year, while most of our contracted programming and retransmission expense increases took effect on January 1. We expect these timing differences will impact the comparability of first quarter results on a sequential basis. However, we do not believe it will have an effect on our full year adjusted EBITDA growth. As part of our strategic focus on high-speed data and counting cash flows rather than customers, in the fourth quarter of 2021, we made the tactical decision to begin unwinding our bulk cable video offerings. This decision not only prepares our network for the next generation of high-speed data enhancement but also eliminates the timing and energy spent focusing on an unprofitable product offering. We expect this initiative to accelerate our video and customer losses through the first quarter of 2022, but ultimately have a positive impact on margins and adjusted EBITDA growth. On a sequential basis, our organic video subscriber net loss was approximately $21,000 for the fourth quarter or $18,000 if you include the impact from the CableAmerica acquisition. With that, Elliot, we are now ready for questions.

Thank you. [Operator Instructions] Our first question today comes from Philip Cusick with JPMorgan. Your line is open.

Hi, thank you, guys. A couple of things. Just to follow-up on, first, Julie, can you talk again about fiber overlap? Typically, what fiber provider is at and what’s the mix across your footprint? Thank you.

Fiber overlap. So in terms of total competition, so we have less than 28% overlap with anyone who is providing a service of 100 megs or higher. Actually breaking that down further, if you look at overlap where there are two or more providers, who offer 100 meg or higher, that percentage is around 5% for fiber-to-the-home. So incredibly low. That typically for us refers to AT&T with a key bit of CenturyLink and I think that answers your question. Let me know if not.

Okay. So very little sort of fiber like insurgent fiber overbuild, any idea within the 28%, what the fiber versus fiber-to-the-node might look like?

Sure. So I think our fiber homes passed is around 17%. And so I think – and that’s, as Julie mentioned, the majority of that is the telco, the intefiber with small areas where we have more, I would call the more local insurgents. And so we’ve had – and that honestly, the piece that makes up the 5%, if you think about the 5% where we have two competitors. In Fargo, we’ve had Midco since 2014. In Odessa, we’ve had Grande since 2000. That honestly makes up the biggest chunk of homes pass that we have, where there is two other providers, but there are smaller operators that most people probably haven’t heard of that are competing in one-off markets. But given the nature of our 24 states that were spread across, it’s hard for a local insurgent to address a lot of our footprint.

That makes sense. And then, Julie, you talked about the 100 megs going to 200. How big again is that to HSD customers?

22% of our residential HSD customers.

Okay. And when are they going to be converted to 200 with…

At the end of the first quarter.

And we won’t start seeing the impact in the financials as a percentage.

Okay. And then finally, anything – the commercial revenue was sort of flat sequentially. I don’t know if there is any sort of in and outs there with all the different deals going on or anything else you should follow? Thank you.

Yes, I don’t – I mean, honestly, I think you – in looking at the year-over-year, we’re still up 8% in an environment where that business is coming back for us. I think we saw increases each month – each quarter throughout the year. So I’m not – I’d have to compare notes what you feel on exactly what you’re looking at, but we saw at least a relative to prior year increase each year. So – sorry, each quarter, sorry.

Great. Okay, thanks, guys.

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

Hi, thank you. I don’t want to steal too much of your thunder from your big Analyst Day next week. But given that cable valuations in general have come off a bit, are you seeing any differences in the M&A market? Any more willingness from smaller potential acquisition targets to at least be more receptive? Or is it – is the private market still so strong that it makes it difficult for companies to move off of high expectations?

Yes. I would say it’s kind of been this weird dynamic in that while cable valuations have pulled down the private market transactions have only gone up and have gone up pretty substantially. And so we fortunately have a nice pipeline of deals that are tied to the different investments that we made and continue to see opportunities where someone is looking for a minority investor. And so – so we still – and who are looking for something different than just going and maximizing or selling out in those deals where it’s just truly selling out, we’re not all that competitive in transactions where they are looking for something unique. That’s where we’ve had the ability to transact. And we still see that opportunity existing. But yes, there is a much wider gap in valuation now than there was 2 years ago when we started kind of acquiring more aggressively.

And Steven, Julie, if I can ask a follow-up, because you mentioned, Julie, in your remarks that margins would have been – without Hargray would have been 53.5 I think you said, which would suggest that you’re still seeing a solid trajectory of margin improvement in the legacy, I guess, what I would call here, the legacy business. Does that suggest that as you lap the Hargray acquisition that we should start to see a resumption in overall margin increases again for 2022?

Yes. I absolutely think so. Craig, you’ve got the mix shift continuing to happen. And then you have this – you have several acquisitions that are in the process of being integrated. And each time we do that, we make them look like us. And so that is pulling the margin up. And I would be remiss not to also mention our continuous improvement mindset where every day, day in and day out, looking for ways to make our processes better for our associates and our customers and those usually result in savings as well. Thus, better margins.

Yes. And just a reminder for everyone else, when we announced the Hargray transaction, we announced that we wouldn’t be realizing energy synergies during 2021 that, that would start in 2022 as the team was staying on to help us do the transition as it was kind of a quick close. And so with both now getting to the start of 2022 combined with the Clearwave Fiber transaction, where we’ve got a number of people going over to be part of that entity as well. We will start seeing the margins related to Hargray pickup, which will help the total margin growth as well.

Alright, thank you.

Our next question comes from Frank Louthan from Raymond James. Your line is open.

Great. Thank you. So besides the percentage of your territory, you currently have fiber, you mentioned Lumen, AT&T, they are both targeting some more builds. Looking out over the next couple of years, how do you see that impacting the fiber overlap if we look out a couple of years, what percentage of your territory do you think that they are going to target.

Well, certainly, there is been a lot of press about everyone, not just the major telcos scrambling to build fiber everywhere in the U.S. But I think it’s important to reinforce that 2021 was our strongest year in organic growth on our spend. And two-thirds of that growth came from Connect, while third of it came from lower churn. So we don’t see a softening in our marketplace, and we monitor competition down to the node or neighborhood level. And given that our competitive profile has not changed much, I mean we’ve had that whether we were talking about the percent of any sort of competition or which is less than 20% or how much has got fiber, which is up 17%, probably indicates that those higher ROI hurdle rates in our markets or maybe it’s supply chain, materials and labor that are holding people back, I’m not sure what it is, Frank, but we’re not seeing it yet. I’m not sure I can [indiscernible] when it’s going to happen. We watch for it carefully, like I said, down to the node level. But so far, we’re doing pretty well.

Yes. And I think Lumen is a good example where they are selling the piece off to Apollo, our overlap with the Apollo piece, which is probably going to be more quickly fibered is really small. It’s a small percentage of our overall overlap. And of those ones, it’s a really – it’s some of the smallest markets we have in Indiana and Illinois. And so then there is a question of what does Lumin end up doing. But like Julie said, we monitor it all. We know the number is going to go up over time, and we expect it to. That being said, at 38%, 39% penetration in a market where there is two operators, we still have the opportunity to maintain our fair share and still grow from here. And we think broadband usage is growing in our footprint, and we think that as they continue to move up market, we will continue to get our share. And it is – at the end of the day, it’s not – it’s all about service. So, there is technology and then there is service they are taking care of customers, there is reputation. And I think we have done a great job in all of these markets, and that’s why we do well when we do face competition.

Absolutely in a value-based service where customers get choice and having a strong neighborly service, where we live right next door to our customers has to be part of that foundation of our defense. But we do have much more to our competitive playbook if we need to bring it to bear.

Alright. Great. And one follow-up, how much ongoing capital do you expect to put in Clearwave on an annual basis?

We don’t. There was $320 million funded that will be funded that’s committed by the equity partners and we don’t have any debt on that entity yet, and we certainly have debt capacity, especially as the business grows. And so we don’t expect to. That being said, they will hopefully also be acquisitive. And if they find other businesses that they can buy to deploy the capital more quickly. And we have the opportunity to invest. We certainly will have the right to without the obligation. And so – but in the – in any way you are modeling it certainly shouldn’t be thought that there is any kind of annual contribution that has to go into that entity.

Alright. Great. Thank you.

Our next question comes from Greg Williams from Cowen. Please go ahead.

Great. Thanks for taking my questions. On the new video strategy, it sounds like you are becoming more video agnostic than you even were before. Are you thinking about partnering with the over-the-top platforms for your subscriber base that still looks for video or gross adds that would look for video? Second question is around the Biden funding and the IIJA. Have you given any thought to participating in that program, expanding your footprint? And part and parcel to that, the ACP program. It sounds like it’s a lot more permanent than the EBB programs could be more attractive for you guys to look at in terms of targeting gross adds in the lower income cohorts. I am just wondering your interest in that. Thanks.

So on the video side and the video partnering side, when it comes to a strategy, this is truly related to both videos. This is – whether it’s condos, hotels, those types of businesses where we just – we don’t have a competitive product and it’s not a financially viable business for us. And so exiting out of that isn’t really changing our video strategy around residential. We have the IP platform that we are kind of migrating people to recover the broadband. That being said, we certainly don’t encourage people or try to market to people to move into those packages. It’s the – if that’s what the customer chooses then that’s the offering we have. We certainly have some of our investments that are doing different things. Some of them are doing rev shares with other over-the-top providers, those kinds of things. And so part of that process, we get to see how others do and what they like. But currently, we don’t have any plans on going down that path.

Yes. And – so those I heard, I don’t know what I was doing during the first part of your question, sorry, Greg. By item funding, absolutely, we have been working on how to best structure and attack that once the process for how to go about it is revealed. Keep in mind, it will be done at the state level and it’s different, more than likely state-by-state. We imagine that it will be both defensive and offensive in nature. And as Steven mentioned, we have partners who are already really great getting money from [Technical Difficulty]. So, we plan to leverage their learning and the structure that we put into place to capitalize on that funding where appropriate. The ACP program, so we are transitioning our customers to that. And in the fourth quarter, actually of 2021, we did jump in customers. It wasn’t – it was one of the largest additions in terms of the quarter, we still don’t have – we have 10,000 customers on EBB, now ACP, but we did pick up more in the fourth quarter than we did previous to that. Yes, it is assumed to be ongoing. It is lesser amount, as you know, we do track those customers very carefully to measure any potential impact from bad debt at this point in time. Interestingly enough, the customers that are coming on to that program was very much like our non-ACP customers in terms of demographics.

Yes. Thank you.

Next question Elliot. Elliot, do we have any more questions? Brandon, I think your line is open.

I am open. Okay. Hey. Thanks. I think I will just go. I think I have two questions for Julie. Julie, I guess could you give us an update more broadly on your go get that you have for synergies, maybe update us on where you are with Fidelity, what you have left to get and similar type of questions for Hargray maybe CableAmerica. Second question is around the 200 – 100 meg to 200 meg migration as well. It sounds as if the 100 meg product is discontinued if 200 meg becomes your new standard. How are you thinking about the rest of your speed tiers right now because right now, you have a 100 meg, 200 meg and 300 meg offering, I am curious how you are thinking about packaging pricing for the other speed peers? Thanks.

Right. Great. So, I will start in reverse order and then maybe that gives Steven the time to answer the second question. So yes, you are absolutely correct Brandon. 200 meg will become – and quite honestly, it already is our standard offering. That is the package that those customers elect service for us to provide to them. We will still have – and it’s still the regular price of $65, 200 megs, it’s 700 gigs of data. We will still have our next level of service, which is at $80 for 300 meg. We are adding a 500 meg at $90, which is – you can probably tell us a nice price point for someone to easily jump to from that $80. And in the process, coming from we did when we launched our flex pricing in 2019, we have actually lowered the price of our gig service, and we have lowered the price of our unlimited. And so by doing that, again, we are giving customers value. We are giving them choice, but we have done the modeling and know that it will still result in ARPU growth.

And then on synergies, on the Fidelity side, we still have some to realize, but I would say that they are not getting realized in the near future because we are working on billing conversion timing and those kinds of things that will bring the incremental. That being said, the growth they have had and the kind of synergy realization and the margin that they are operating at right now is fantastic. And so it will just be incremental upside when we do get there. But there is still certainly a few million left in synergies related to that. Hargray, as I mentioned, we originally disclosed that it would be $45 million. We really haven’t realized any of that yet and expect to start seeing those synergies in earnest right now, and those will still certainly last over the next 2 years-plus as we go through all the different forms of integration, both from a system standpoint and a people standpoint and a call center standpoint, those kinds of things. And then CableAmerica, it’s a small deal LQA revenue for the fourth quarter of that was just under $20 million. And so I think the way we think about that is it’s a business that is low penetration to start with. So, there is the upside penetration opportunity, and then there is fairly quickly getting it to kind of Cable One margins and candidly, should be higher than Cable One margins just because they are – it truly is just within one of our – it’s really within the Fidelity operating region. So, we should be able to take advantage of a lot of resources that are in place to help that allow. And obviously, that combined with the fact that it was an asset deal and we got step up for that. We will get a nice tax benefit associated with well, which kind of lowers that multiple pretty nicely.

Got it. If I could ask just one more, on CapEx, did you guys with capital that – did you guys give the capital that you spent that will be going with the Clearwave JV? And if you didn’t, could you help us sort of square away our model so we can think about bridging to CapEx for ‘22?

Sure. So the numbers that we did give was the numbers that they spent in the fourth quarter, which was…

$7.8 million.

$7.8 million. So, that was the – what those businesses were what they spent in the fourth quarter. What I would say is when you look at our overall CapEx and the amount we are spending on expansion in general, we expect that number to move down to $30 million to $40 million over time. There still will be some volatility in that just based on all the government funding programs that are coming out and some of those are match programs. And so as we get opportunities, and that’s certainly an opportunistic business, we are kind of building $30 million to $40 million of within our footprint that we want to do, with the ability to upsize that if opportunities present themselves. So, relative to the current year, it’s certainly a $30 million plus – $30 million, $40 million decrease at least on a run rate basis going forward from the impact of CapEx.

And to clarify, the revenues from Clearwave were $7.8 million and CAP was about $17 million.

I am sorry. Yes, I gave the wrong number. It’s $17.2 million for the fourth quarter. So – and clearly, it’s not just we are sending that capital over and they are spending it. They certainly intend to accelerate their capital deployment. So – did that answer your question, Brandon?

We have come to the end of our Q&A. I will now hand back to Julie Laulis for any final remarks.

Thank you, Elliot. We appreciate everyone joining us for today’s call, and we look forward to speaking with you at our upcoming Investor Day on Thursday, March 3rd. Thanks, everybody.

This concludes today’s call. We thank you for joining. You may now disconnect your lines.