WideOpenWest,Inc.(WOW) 首席执行官 Teresa Elder 于 2019年 第三季度业绩-收益电话抄本

WideOpenWest, Inc. (NYSE:WOW) Q3 2019 Results Earnings Conference Call November 1, 2019 9:00 AM ET

WideOpenWest, Inc. (NYSE:WOW) Q3 2019 Results Earnings Conference Call November 1, 2019 9:00 AM ET

公司参与者

Lucas Binder - Investor Relations
Teresa Elder - Chief Executive Officer
Rich Fish - Chief Financial Officer

  • Lucas Binder - Investor Relations
  • Teresa Elder - Chief Executive Officer
  • Rich Fish - Chief Financial Officer

电话会议参与者

Frank Louthan - Raymond James
Zack Silver - B. Riley
Batya Levi - UBS
James Ratcliffe - Evercore ISI
Brandon Nispel - KeyBanc Capital Markets
Kyle Evans - Stephens

  • Frank Louthan - Raymond James
  • Zack Silver - B. Riley
  • Batya Levi - UBS
  • James Ratcliffe - Evercore ISI
  • Brandon Nispel - KeyBanc Capital Markets
  • Kyle Evans - Stephens

会议主持员

Good morning, ladies and gentlemen, and welcome to the Third Quarter 2019 WideOpenWest, Inc. Earnings Conference Call. [Operator Instructions] As a note, today's call is being recorded.
I would now like to turn the call over to Mr. Lucas Binder, WOW!'s Vice President of Corporate Development and Investor Relations. Mr. Binder, please go ahead.

Good morning, ladies and gentlemen, and welcome to the Third Quarter 2019 WideOpenWest, Inc. Earnings Conference Call. [Operator Instructions] As a note, today's call is being recorded.

I would now like to turn the call over to Mr. Lucas Binder, WOW!'s Vice President of Corporate Development and Investor Relations. Mr. Binder, please go ahead.

Lucas Binder

Lucas Binder

Thank you, Keith. Good morning, everyone and thank you for joining our third quarter 2019 earnings call. With me today is Teresa Elder, WOW!'s Chief Executive Officer; and Rich Fish, WOW!'s Chief Financial Officer.
Before we get started, we need to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements. You are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update such forward-looking statements.
For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the Risk Factors section of our Form 10-K filed with the SEC.
In addition, please note that in today's call and in our earnings release, we refer to certain non-GAAP financial measures. Such measures include adjusted EBITDA, transaction-adjusted EBITDA, transaction-adjusted capital expenditures, transaction-adjusted capital expenditures excluding transaction-adjusted strategic capital expenditures and transaction-adjusted diluted earnings per share.
While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These include a reconciliation of reported adjusted EBITDA to transaction-adjusted EBITDA in our earnings release and trending schedule available on our website at ir.wowway.com.
Unless otherwise noted, references to transaction-adjusted results discussed in this call means results included, adjusted to include the impact from acquisitions and exclude the impact from dispositions and exclude the impact from Hurricane Michael and associated insurance settlement.
Now I'll turn the call over to Teresa.

Thank you, Keith. Good morning, everyone and thank you for joining our third quarter 2019 earnings call. With me today is Teresa Elder, WOW!'s Chief Executive Officer; and Rich Fish, WOW!'s Chief Financial Officer.

Before we get started, we need to remind everyone that during our call, we will make some forward-looking statements about our expected operating results, our business strategy and other matters relating to our business. These forward-looking statements are made in reliance on the safe harbor provisions of the federal securities laws and are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, financial position or performance to be materially different from those expressed or implied in our forward-looking statements. You are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update such forward-looking statements.

For additional information concerning factors that could affect our financial results or cause actual results to differ materially from our forward-looking statements, please refer to our filings with the SEC, including the Risk Factors section of our Form 10-K filed with the SEC.

In addition, please note that in today's call and in our earnings release, we refer to certain non-GAAP financial measures. Such measures include adjusted EBITDA, transaction-adjusted EBITDA, transaction-adjusted capital expenditures, transaction-adjusted capital expenditures excluding transaction-adjusted strategic capital expenditures and transaction-adjusted diluted earnings per share.

While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These include a reconciliation of reported adjusted EBITDA to transaction-adjusted EBITDA in our earnings release and trending schedule available on our website at ir.wowway.com.

Unless otherwise noted, references to transaction-adjusted results discussed in this call means results included, adjusted to include the impact from acquisitions and exclude the impact from dispositions and exclude the impact from Hurricane Michael and associated insurance settlement.

Now I'll turn the call over to Teresa.

Teresa Elder

Teresa Elder

Thanks, Lucas, and thank you, everyone for joining today's call. We are very pleased with the operational execution reflected in our third quarter 2019 results. We saw positive HSD RGU additions, organic HSD RGU additions, solid Edge-Out subscriber growth, our best Edge-Out homes passed expansion month in our history and continued growth in transaction-adjusted EBITDA.
Total subscribers grew 7,800 in the third quarter of 2019. This represented the best quarterly subscriber growth in 6 quarters. HSD RGUs grew by 10,200 in the quarter, the best HSD RGU growth since the first quarter of 2018. Organic HSD RGUs also grew in the third quarter, adding 7,900. Total subscriber churn remains consistent with the year ago period, which has been our best third quarter churn on record.
As we exited the second quarter, we noted that connects have returned to expected levels. Coupled with continued execution on our retention efforts, we were able to drive the strong operating results seen in the third quarter.
Edge-Out homes passed grew by 14,000, which included our best month of growth in Edge-Out homes passed in the company's history. Edge-Outs added 1,900 subscribers, which was the best growth since the third quarter of 2018. Several recently launched Edge-Out Nodes continue to demonstrate rapid adoption, reaching double-digit penetration within a couple months of launch.
Third quarter 2019 total revenue of $285.4 million was down 2.1% year-over-year. The decline in total revenue was driven by lower subscription revenues, specifically a $12.9 million or 10.8% decline in video subscription revenue. This was partially offset by HSD subscription revenue growth of $11.2 million or 9.4%.
As we have discussed, the focus on our customers has been the hallmark of our transformation efforts, and this has been why we continue to provide a compelling video offering for customers who want linear video. At the same time, while we are not happy to have declines in subscription revenues, the mix shift towards HSD is accretive to the business.
Additionally, notifications to customers will be going out this month that we are implementing a rate increase on out-of-contract video customers effective December 2019. The reason for the acceleration into the end of the year is to better match ongoing programming increases that will take effect at the start of 2020.
Third quarter 2019 Business Services subscription revenue grew 5.2% year-over-year. We remain encouraged by the potential of our commercial business and expect it to continue to contribute to our overall growth.
Third quarter transaction-adjusted EBITDA of $110.4 million was up 3.5% on a year-over-year basis. As we have discussed, the investments in the business we made in 2018 have helped to drive an inflection in 2019.
WOW!'s vision, connecting people to their world through the WOW! experience by being reliable, easy and pleasantly surprising every time, resonates through all of our interaction. Over the last year, we have continued to make investments in our people to ensure we can attract, develop and retain the best talent in our industry. Our investments in our employee training, compensation and benefits are yielding strong results. During the third quarter of 2019, we saw our employee voluntary turnover decline by 5 percentage points versus the third quarter of 2018. We also saw our employee Net Promoter Scores remain at the high levels we achieved throughout 2018.

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谢谢卢卡斯,也谢谢大家参加今天的电话会议。我们对2019年第三季度业绩所反映的运营执行情况感到非常满意。我们看到了积极的HSD RGU增幅,有机HSD RGU增幅,Edge-Out用户稳健增长,我们最好的Edge-Out房屋经历了我们历史上的扩张月,并且交易调整后的EBITDA持续增长。

2019年第三季度,总订户增长了7,800。这是六个季度以来最好的季度订户增长。本季度HSD RGU增长了10,200,是自2018年第一季度以来最高的HSD RGU增长。有机HSD RGU在第三季度也增长了7,900。用户流失总数与去年同期保持一致,这是我们有史以来最好的第三季度流失率。

在退出第二季度时,我们注意到连接已恢复到预期水平。加上对保留工作的持续执行,我们能够取得第三季度强劲的经营业绩。

通过的Edge-Out房屋增长了14,000,其中包括我们公司历史上通过的Edge-Out房屋增长最好的月份。 Edge-Outs增加了1,900个用户,这是自2018年第三季度以来的最佳增长。最近推出的几个Edge-Out Nodes继续展现出快速的采用率,在推出后的几个月内达到了两位数的普及率。

2019年第三季度的总收入为2.854亿美元,同比下降2.1%。总收入的下降是由较低的订阅收入驱动的,特别是视频订阅收入减少了1,290万美元或10.8%。 HSD订阅收入增长1,120万美元或9.4%,部分抵消了这一增长。

正如我们所讨论的那样,对客户的关注一直是我们转型努力的标志,这就是为什么我们继续为需要线性视频的客户提供引人注目的视频产品的原因。同时,尽管我们不满意订阅收入的下降,但向HSD的混合转变对业务有所促进。

此外,本月将向客户发出通知,称我们将从2019年12月开始对合同外视频客户实施费率上调。加速到年底的原因是为了更好地与正在进行的节目增长相匹配在2020年初生效。

2019年第三季度,商业服务订阅收入同比增长5.2%。我们仍然对商业业务的潜力感到鼓舞,并希望它继续为我们的整体增长做出贡献。

第三季度经交易调整后的EBITDA为1.104亿美元,同比增长3.5%。正如我们已经讨论的那样,我们在2018年进行的业务投资有助于推动2019年的业务增长。

WOW!的愿景,通过WOW!将人们连接到他们的世界!每次都可靠,轻松和令人惊喜的体验,在我们所有的互动中产生了共鸣。在过去的一年中,我们继续对员工进行投资,以确保我们能够吸引,发展和保留行业内最优秀的人才。我们在员工培训,薪酬和福利方面的投资取得了丰硕的成果。在2019年第三季度,我们看到员工的自愿离职率比2018年第三季度下降了5个百分点。我们还看到,员工净晋升得分保持在整个2018年的高水平。

We also remain focused on removing bad volume from the business, which we define as unnecessary calls or truck rolls. We've highlighted this in the past, but the increased penetration of Whole-Home WiFi has begun to drive a discernible decline in service calls. Network improvement initiatives through decreases in outage events and driving down outage times have reduced calls throughout the year. Additionally, customer premise equipment retirement, removal of legacy boxes from our network, have had a similar effect. This is an area we will continue to focus on throughout the rest of this year and 2020.
The launch of our 200 meg speed tier has been highly successful, and the adoption continues to accelerate. We are particularly pleased that the preponderance of the adoption within 200 meg speeds are coming from 100 meg buyers, opting to take higher speeds and driving higher ARPU.
Whole-Home WiFi and our online channel, wowway.com, are making excellent strides as growth drivers of the business. We've expanded Whole-Home WiFi throughout our footprint and have added features and functionality to the online store, which continues to be developed and deployed.
We saw strong subscriber growth in the third quarter and have continued to see solid October connects. The shift toward November and December will likely see more tempered connect behavior consistent with our seasonal expectations.
Churn was stable in the third quarter, and our investments in the business contributed to the continued growth in transaction-adjusted EBITDA of 3.5%.
Now I'll turn it over to Rich.

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我们还将继续专注于从业务中清除不良流量,我们将其定义为不必要的电话或上门服务。过去我们曾强调过这一点,但全屋WiFi的普及率已经开始明显地导致服务呼叫数量的下降。通过减少停电事件和缩短停电时间来改善网络的计划,全年减少了通话次数。此外,客户前提设备的退役,从我们的网络中删除旧盒子也产生了类似的效果。这是我们将在今年余下时间和2020年继续关注的领域。

我们200兆速度级的发布非常成功,并且采用速度还在不断加快。我们特别高兴的是,200兆速度内的采用率主要来自100兆的购买者,他们选择了更高的速度并推动了更高的ARPU。

全屋WiFi和我们的在线频道wowway.com作为业务增长的推动者正在取得长足进步。我们已将全家WiFi扩展到了我们的整个覆盖范围,并为在线商店增加了功能,该功能将继续开发和部署。

我们在第三季度看到了强劲的用户增长,并且继续看到10月的连接稳固。向11月和12月的转变很可能会看到与我们的季节性预期一致的更加缓和的联系行为。

客户流失率在第三季度保持稳定,我们在该业务的投资为交易调整后EBITDA的持续增长贡献了3.5%。

现在,我将其交给Rich。

Rich Fish

Rich Fish

Thanks, Teresa. For the third quarter of 2019, we reported total revenues of $285.4 million, which were down 2.1% on a year-over-year basis, and net income of $11.2 million. As Teresa mentioned, third quarter 2019 transaction-adjusted EBITDA totaled $110.4 million, which was up 3.5% on a year-over-year basis. And transaction-adjusted EBITDA margin in the third quarter increased to 38.7%. This represents an improvement of over 200 basis points on a year-over-year basis as a result of the beneficial margin impact from growth in HSD RGUs and ARPU increases, Business Services subscription revenue growth and lower operating expenses.
As of September 30, 2019, total subscribers increased by 7,800 or 1.0% over the June 30, 2019, total subscriber count. In total, net HSD RGUs increased by 10,200 or 1.3% from June 30, 2019.
Subscriber activity for the third quarter of 2019 represented a solid return to growth for WOW! as the HSD RGU net change during the quarter included organic HSD RGU additions of 7,900.
Business Services subscription revenue totaled $34.7 million in the third quarter, a year-over-year increase of $1.7 million or 5.2%.
As Teresa mentioned, Edge-Outs continue to be a growth driver, and we expect to continue to see momentum in this footprint expansion initiative into the future. The Edge-Out Nodes we started in 2016 have added a total of 41,700 new homes passed, and we've achieved 33.6% penetration to date in these communities. The 2017 Edge-Out Nodes have added a total of 66,600 new homes passed and current penetration now stands at 27.9%.
The 2018 Edge-Out Nodes have added 30,100 new homes passed. Penetration continues to ramp, which is now at 16.6%, and the Edge-Out Nodes we just started during 2019 have already added 28,200 new homes passed at this point.
We continue to see great opportunity in our Edge-Out projects. And although we do expect to see some variability in both the pace of investment and the penetration percentages across both individual projects and yearly vintages, because each project has different cost-to-build characteristics, all Edge-Out projects that we've decided to pursue have attractive ROI opportunities and are expected to be highly accretive.
Capital expenditures for the third quarter of 2019 totaled $63.4 million on a reported basis. Of that amount, $2 million was incurred toward the completion of the Chicago fiber project, which is substantially complete as of the end of the third quarter.
Excluding the capital investments attributable to the Chicago fiber project, transaction-adjusted CapEx for the third quarter of 2019 totaled $61.4 million, of which $16.5 million was incurred in transaction-adjusted strategic investments. Excluding those $16.5 million of transaction-adjusted strategic capital investments, transaction-adjusted CapEx totaled $44.9 million, or 15.7% of total third quarter 2019 revenue.
And finally, with regard to liquidity and leverage, as of September 30, 2019, we had $9.3 million in cash on hand, outstanding debt totaling $2.324 billion and $224.5 million of undrawn revolver capacity. We continue to see sequential improvements in net leverage, which came in at 5.35 times as of September 30, 2019, on a trailing 12-month transaction-adjusted EBITDA basis, which was down from the previous quarter of 5.37 times at June 30, 2019.

谢谢,特蕾莎在2019年第三季度,我们报告的总收入为2.854亿美元,同比下降2.1%,净利润为1,120万美元。正如特雷莎(Teresa)所述,2019年第三季度经交易调整后的EBITDA总计1.104亿美元,同比增长3.5%。第三季度经交易调整后的EBITDA利润率增至38.7%。由于HSD RGU和ARPU的增长,业务服务订阅收入的增长以及运营费用的降低,这对利润率产生了有益的影响,这表明同比增长了200个基点。

截至2019年9月30日,总订户数量比2019年6月30日增加了7,800位,即1.0%。自2019年6月30日起,HSD RGU净额总计增加10,200或1.3%。

2019年第三季度的订户活动代表了WOW的强劲增长回报!由于本季度HSD RGU净变化包括有机HSD RGU增加了7,900。

第三季度商务服务订阅收入总计3470万美元,同比增长170万美元或5.2%。

正如Teresa所说,Edge-Outs继续是增长的驱动力,并且我们希望在未来的足迹扩展计划中继续看到动力。我们于2016年启动的Edge-Out Nodes总共增加了41,700套新房屋,到目前为止,我们在这些社区中的普及率达到了33.6%。 2017年的Edge-Out Nodes总共增加了66,600套新房屋,目前的普及率达到27.9%。

2018年Edge-Out节点增加了30,100个新房屋。渗透率继续上升,目前为16.6%,我们在2019年刚刚启动的Edge-Out Nodes已经增加了28,200套新房屋。

我们继续在Edge-Out项目中看到巨大的机会。尽管我们确实希望看到各个项目和年度葡萄酒的投资速度和渗透率都有一定的差异,但是由于每个项目的建造成本都有不同,因此我们决定将所有Edge-Out项目追求具有有吸引力的ROI机会,并且有望实现高增长。

按报告的基础,2019年第三季度的资本支出总计6340万美元。其中的200万美元是用于完成芝加哥纤维项目的,该项目到第三季度末已基本完成。

剔除归因于芝加哥纤维项目的资本投资,2019年第三季度经交易调整后的资本支出总额为6,140万美元,其中1,650万美元来自经交易调整后的战略投资。扣除那些经交易调整后的1,650万美元战略资本投资后,经交易调整后的资本支出总额为4,490万美元,占2019年第三季度总收入的15.7%。

最后,关于流动性和杠杆作用,截至2019年9月30日,我们手头现金为930万美元,未偿债务总额为23.24亿美元,未动用左轮手枪产能为2.245亿美元。我们继续看到净杠杆率的连续改善,截至2019年9月30日,净杠杆率是5.35倍,在连续12个月的交易调整后EBITDA基础上,比上一季度的5.37倍(2019年6月30日)有所下降。

So that concludes our prepared remarks. And I'll turn it back to Keith to open the call for questions.

So that concludes our prepared remarks. And I'll turn it back to Keith to open the call for questions.

问答环节

[Operator Instructions] We'll take today's first question from Frank Louthan with Raymond James.

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[操作员说明]我们将与弗雷德·劳森(Ray Frank James)一起讨论今天的第一个问题。

Frank Louthan

弗兰克·卢森

Looking at the success with the data, can you give us some idea of how many homes have the Whole-Home WiFi? And any thoughts on adding maybe some lower speed tiers, something like that, to get some additional penetration?
And then follow-up. Is there any footprint rationalization you would consider maybe to help with delevering and so forth?

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看看数据是否成功,您能否给我们一些了解全屋WiFi的家庭的信息? 关于增加一些较低速度的等级(以获得类似的渗透率)的任何想法?

然后跟进。 您是否考虑过足迹合理化以帮助去杠杆等工作?

Teresa Elder

Teresa Elder

Thanks, Frank. To take your first question on Whole-Home WiFi, we really don't break out specifically the amount of sales that we get on Whole-Home WiFi. But what I can tell you is that we continue to see growth in the take rate with the HSD product. And the Whole-Home WiFi product really helped us drive down those calls to the care organization and truck rolls. So it just plays a key role in, I think, helping the whole customer experience as well as our bottom line.
In terms of the speed tiers, we do also have the 100 meg product and we feel like the mix of products that we have for our customers is quite good. And we continue to always evaluate our products and what our customers need.
With regard to your question about the footprint, we like the markets that we have. And we always are looking at where things can work opportunistically. But I feel very good about the footprint that we have and how we're driving our customer growth.

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谢谢,弗兰克。 对于第一个关于全家庭WiFi的问题,我们确实没有具体说明全家庭WiFi的销售量。 但是我可以告诉您的是,我们继续看到HSD产品的使用率增长。 而且,Whole-Home WiFi产品确实帮助我们减少了对医疗机构和卡车上班的电话。 因此,我认为它在帮助整个客户体验以及我们的底线中起着关键作用。

就速度等级而言,我们也有100兆的产品,我们觉得我们为客户提供的产品组合非常好。 而且我们将继续始终评估我们的产品以及客户的需求。

关于您的足迹问题,我们喜欢我们拥有的市场。 我们一直在寻找可以在机会上发挥作用的地方。 但是我对我们的足迹以及我们如何推动客户增长感到非常满意。

会议主持员

We'll take our next question from Zack Silver with B. Riley.

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我们将与Z. Silver和B. Riley一起回答下一个问题。

Zack Silver

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扎克·银

I wanted to first start with the rate increase on the video side, and I understand that that's to get ahead of some programming escalators coming at the beginning of next year. Charter, who you have quite a bit of overlap with, just raised HSD prices for nonpromotional pricing. And I'm just wondering, is this something where you guys could see some ARPU growth from a price hike in HSD? Or are you sort of holding off on that at this time?

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我想首先从视频方面的费率提高开始,我知道这要赶在明年年初推出一些编程自动扶梯之前。 您与Charter有很多重叠之处,他只是通过非促销性定价提高了HSD价格。 我只是想知道,你们是否可以从HSD价格上涨中看到一些ARPU增长? 还是您此时正在推迟呢?

Teresa Elder

Teresa Elder

So yes. We decided to go ahead and take the video increase in December to get ahead of the programming increases that take place at the first of the year. With regard to high-speed data, I think we always make sure that we are value priced compared to our competition. So we look at both our rack rate as well as promotions and discounts in the market. So we continue to evaluate that. At this time, we don't have plans to increase our HSD pricing.

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是的 我们决定继续进行,并在12月增加视频,以赶超今年第一季度的节目增加。 关于高速数据,我认为我们始终确保与竞争对手相比,我们具有很高的价格。 因此,我们既要查看机架价格,也要查看市场中的促销和折扣。 因此,我们继续对此进行评估。 目前,我们还没有提高HSD价格的计划。

Zack Silver

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扎克·银

Okay. And then on the big sort of net HSD subscriber growth in the quarter, which accelerated meaningfully from the year ago period. You said that it was, Teresa, you said it was sort of a mix of churn and also connects, but that would imply that connects are up pretty substantially year-over-year. And I'm just wondering if you can give us a little bit more detail on maybe what's working, what's going on maybe in the competitive landscape that's helping drive the higher connect volume.

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好的。 然后是本季度HSD净订户的大幅增长,与去年同期相比显着加速。 您说的是Teresa,您说的是客户流失和联系的混合体,但这意味着联系每年都在大幅增加。 我只是想知道您是否可以为我们提供更多详细信息,以了解可能的工作方式,正在发生的事情,也许是在竞争环境中有助于提高连接量。

Teresa Elder

Teresa Elder

And yes, you're correct. We are seeing improvement both on the connects as well as continuing to maintain the record lows that we had on churn. So I think there are a number of things that are taking place.
In general, I'd say the competitive environment really hasn't changed materially over the last few quarters. We of course are focused on our retention and save activity. But the rate increases that our competitors have put in place across the board help offset some of the challenges that we've had to do in terms of discounting. So that's a good thing. But we continue to, I think, benefit as well from improved sales processes from the collaboration between our field, our marketing and our sales force and the continued growth of our website, wowway.com. We make rolling improvements to that on an ongoing basis, and that has become an even larger percentage of our total sales.

www.

是的,你是对的。 我们不仅在连接方面看到了改善,而且还在继续保持我们的客户流失率的历史新低。 所以我认为正在发生许多事情。

总的来说,我想说竞争环境在过去几个季度中并没有发生实质性变化。 我们当然会专注于保留和保存活动。 但是,我们竞争对手全面实施的提价措施有助于抵消我们在打折方面必须要做的一些挑战。 这是一件好事。 但是,我认为,由于我们领域,我们的营销和我们的销售人员之间的协作以及我们网站wowway.com的持续增长,销售流程不断改善,我也将从中受益。 我们不断进行改进,这已占我们总销售额的更大比例。

Zack Silver

www.

扎克·银

And then maybe just a quick one for Rich. Just on working capital. It looks like it increased pretty substantially year-over-year. Just wondering if you can walk us through what's driving that and also if you guys are still expecting positive free cash flow for the year.

www.

然后也许是Rich的快速选择。 只是营运资金。 看起来它同比大幅增加。 只是想知道您是否可以引导我们了解造成这种情况的原因,以及你们是否仍然期望本年度的正自由现金流。

Rich Fish

Rich Fish

Yes. The working capital inside the quarter, really on a year-to-date basis, is from, attributable to bringing down some accruals that were related to, that had been put up previously from, that are no longer needed excess accruals. From a free cash flow standpoint, we still, the guidance that we put out as it relates to free cash flow for the balance of the year was positive. We still believe that we'll be right there.

www.

是。 该季度内部的营运资金(实际上是从年初至今)来自,归因于减少了与以前需要的,与不再需要的多余应计费用有关的应计费用。 从自由现金流的角度来看,我们仍然提出了与年度余额自由现金流相关的指导。 我们仍然相信我们会在那里。

会议主持员

We'll take our next question from Batya Levi with UBS.

www.

我们将与UBS讨论Batya Levi的下一个问题。

Batya Levi

www.

芭提亚·列维

On high-speed data, you mentioned that we should expect some seasonal slowdown in connects in the fourth quarter. But do you think that we're still on a good pace to show year-over-year growth in high-speed data adds?
And then second, can you provide more color on what percent of the video base will see a price increase and how that would compare to the last one that you took? And maybe just to balance that with programming cost. It came down sequentially this quarter. What drove that and what kind of price increase would you expect there?

www.

关于高速数据,您提到我们应该预计第四季度的连接量会出现季节性下降。 但是,您认为我们仍然可以很好地显示高速数据添加量的逐年增长吗?

其次,您能否提供更多颜色的视频,以显示百分之几的视频价格会上涨,以及与您上次购买的价格相比如何? 也许只是为了平衡编程成本。 该季度本季度环比下降。 是什么驱使这种趋势?您希望在那里出现什么样的价格上涨?

Teresa Elder

Teresa Elder

Okay. Thank you for the questions, Batya. So the first question regarding HSD and the seasonal slowdown for the fourth quarter, that's just really across the whole industry. Third quarter, of course, is our strongest as we have the back-to-school push and many people are moving into new homes. So we still believe and will reiterate the guidance that we gave last quarter on HSD net adds, between 10,000 and 20,000. I think we'll be at the high end of that obviously from the strong results of the third quarter. And we believe that our results for the full year will probably be at least comparable with the great growth that we saw last year as well.
In terms of video, I don't think we've put out the number in terms of how many video customers will be impacted by this or the percentage increase on that. But needless to say, what we do that for is to try to cover the programming increases that will be coming the first of the year.

www.

好的。 谢谢您的提问,巴蒂亚。 因此,关于HSD和第四季度的季节性放缓的第一个问题确实涉及整个行业。 当然,第三季度是我们最强劲的季度,因为我们有重返校园的动力,许多人正在搬入新房。 因此,我们仍然相信并重申我们上一季度对HSD净增加的指导,介于10,000和20,000之间。 我认为从第三季度的强劲业绩来看,我们显然将处于高端地位。 而且我们相信,我们全年的业绩至少可以与去年的强劲增长相提并论。

就视频而言,我认为我们没有针对受此影响的视频客户数量或百分比增加的数量进行统计。 但是不用说,我们这样做的目的是试图弥补将在今年第一季度出现的编程增长。

Batya Levi

www.

芭提亚·列维

I was just going to follow up on the sequential decline in the programming cost.

www.

我只是要跟上编程成本的连续下降。

Teresa Elder

Teresa Elder

It's an increase, I'm sorry, in the programming cost as of the first of the year. Or you mean the revenue? The video revenue?

www.

抱歉,今年第一季度的编程费用有所增加。 还是您的意思是收入? 视频收入?

Batya Levi

www.

芭提亚·列维

The programming cost in the quarter looked like it trended down. Was that more a function of video subscribers coming down or were there any true-ups? Is that the good base to think about in terms of the escalator that we'll see next year?

www.

该季度的编程成本似乎呈下降趋势。 视频订户的功能更多吗?还是有实际意义? 那是明年我们将要看到的自动扶梯考虑的良好基础吗?

Rich Fish

Rich Fish

Yes, Batya. That is primarily driven by volume. As video subscribers are attriting, we experienced the volume reduction associated with the programming cost primarily.

www.

是的,巴蒂亚 这主要是由数量驱动的。 随着视频订户的减少,我们主要体验了与编程成本相关的体积减少。

会议主持员

We'll take our next question from James Ratcliffe with Evercore ISI.

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我们将与Evercore ISI讨论来自James Ratcliffe的下一个问题。

James Ratcliffe

www.

詹姆斯·拉特克利夫

Two, if I could. First of all, on the HSD side, last call we talked quickly about system changes in 2Q and the impact that had. Did those essentially push any of those connects into 3Q? So should we really be looking at some sort of 2Q plus 3Q as, versus last year as sort of a block?
And secondly, can you talk about your thoughts around becoming a sort of a centralized hub for the increasingly fragmented OTT services, the same way that clearly some of your competitors are looking at to being a platform even for customers who don't take your video service?

www.

二,如果可以的话。 首先,在HSD方面,最后一次通话我们快速讨论了第二季度的系统变化及其产生的影响。 那些实质上将这些连接中的任何一个推入了3Q吗? 那么,我们是否应该真正将某种形式的2Q加3Q与去年相比较呢?

其次,您能谈谈关于成为越来越分散的OTT服务的集中式枢纽的想法吗,就像您的一些竞争对手显然希望成为一个平台,甚至是那些不拍摄您视频的客户一样。 服务?

Teresa Elder

Teresa Elder

Thanks, James. So yes, we have some system changes that we certainly feel impacted the softness of the HSD connects in the second quarter. I do think third quarter was a stand-alone, very strong quarter on its own. And some of the changes that we made in the systems are really benefiting us now. So I would say I feel quite good about the third quarter even on its own. Second quarter certainly was quite soft and we saw momentum even coming out starting in June.
For your comment about being a centralized hub for OTT services, I really believe that WOW! has positioned itself well for many years to be in exactly that position. We were the first operator to have 1 gig services in over 95% of our footprint. We had, very early days, established a different relationship with Netflix to put the content closer to the customers so that we routinely are in the top rankings of Netflix ISP viewership so that it looks much better on our services, the digitization is just very crystal-clear with Netflix. So we feel very good about our ability to provide streaming services and we believe customers come to us specifically for that. So it's definitely something that we encourage. And I believe that with the Whole-Home WiFi product, it's just an excellent customer experience. So we definitely embrace those changes.

www.

谢谢,詹姆斯。因此,是的,我们进行了一些系统更改,这些更改肯定会影响到第二季度HSD连接的软性。我确实认为第三季度本身就是一个独立的非常强大的季度。现在,我们在系统中所做的某些更改确实使我们受益。因此,我想说即使对于第三季度,我也感觉很好。第二季度肯定很疲软,甚至从6月开始我们都看到了动力。

对于您关于成为OTT服务的集中式中心的评论,我真的相信WOW!多年以来一直定位良好,一直处于这个位置。我们是第一个在我们超过95%的覆盖范围内提供1 gig服务的运营商。我们很早就与Netflix建立了不同的关系,以使内容更接近客户,因此我们通常处于Netflix ISP收视率的首位,因此在我们的服务上看起来要好得多,数字化非常清晰-清除Netflix。因此,我们对提供流媒体服务的能力感到非常满意,我们相信客户是专门为此而来的。因此,这绝对是我们鼓励的。而且我相信,使用全屋WiFi产品,这只是一次出色的客户体验。因此,我们一定会接受这些更改。

会议主持员

We'll take our next question from Brandon Nispel with KeyBanc Capital Markets.

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我们将使用KeyBanc Capital Markets的Brandon Nispel的下一个问题。

Brandon Nispel

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布兰登·尼斯佩尔

I guess as a follow-up to everybody else's questions, can you give us a sense of, I guess, I'll just try in a different way, what percentage of total customers are out of contract related to the video increase?
And then just on the Edge-Outs. Can't help but look at sort of the 2018 and '19 vintages by active days and compare them to 2016 and 2017. Maybe help us understand why penetration rates are so much different for the different vintages.
And then the last one. Can you give us a sense of just what percentage of your customers are taking 200 and 100 megabit product? And maybe just average speed tier overall would help us understand sort of where the business is at in terms of driving customers to higher speed tiers.

www.

我想作为对其他人问题的跟进,您能给我们一种感觉吗,我想,我将尝试以另一种方式,与视频增加相关的总签约客户百分比是多少?

然后就在Edge-Outs上。 不禁要按活跃的日子看一下2018和'19年份的年份,并将它们与2016和2017进行比较。也许可以帮助我们了解为什么不同年份的渗透率差异如此之大。

然后是最后一个。 您能告诉我们您有200%和100兆位产品的客户百分比吗? 也许总体而言,平均速度等级可以帮助我们了解将客户吸引到更高速度等级方面的业务状况。

Teresa Elder

Teresa Elder

Thanks, Brandon, for all the questions. I don't really think we have those percentages to talk about in terms of the total percentage of customers that are out of contract and on the video side. So Lucas, anything you want to add to that?

www.

谢谢,布兰登,所有的问题。 我真的不认为我们可以按照合同外和视频方面的总客户百分比来讨论这些百分比。 那么卢卡斯,您想补充什么?

Lucas Binder

Lucas Binder

I would just say it's, the cohort that is eligible for a rate increase continues to shrink as more people kind of are on contract and their typical rate increase would coincide with the timing of when their contracts expire. So those who are eligible continues to shrink, but it is probably one of the smaller cohorts that we've done in the past. But it's still a decent number of people who are out of contract who will get that rate increase. However, throughout the year, there will be others who will get their rate increase timing with, if you joined in August, then your contract is up in August and your rate increase would happen in August. But for those who are eligible, they're going to receive their rate increase on December 1.

www.

我要说的是,随着越来越多的人签订合同,有资格加息的人群持续减少,他们典型的加息时间将与合同到期的时间一致。 因此,符合条件的人不断减少,但这可能是我们过去所做的较小规模的同类之一。 但是仍然有一定比例的合同违约的人会得到这种加薪。 但是,在全年中,会有其他人获得加息的时间,如果您在8月加入,那么您的合同将在8月到期,而加息将在8月发生。 但是对于有资格的人,他们将在12月1日收到他们的加价幅度。

Rich Fish

Rich Fish

And Brandon, this is Rich. On your question about the Edge-Out penetrations. We actually are not concerned by having different penetration rates across the annual cohorts. And the reason being is, we continue to see great opportunity virtually, I would say, in an unlimited sense. As we move and we evaluate the next individual projects, the actual cost to construct the network expansion projects that we're looking at that are Edge-Outs, every one of them is quite different. And the, specifically with regard to the cost of the network to basically extend over to that new community. Some communities can be aerial, some must be underground. The density of the homes inside of the community that we're building to could vary greatly. So there are multiple, multiple variables that go into the project cost analysis.
Certainly, penetration is a very important one as it speaks to clearly the revenue opportunity that we've garnered. But you could have low penetration rates on a relative sense looking at one cohort to the next, but still have the same return opportunity, if not greater, all dependent upon the cost-to-build characteristics.
So we do not believe by any stretch of the imagination that we are reaching any sort of limit as it relates to Edge-Out opportunities. Third quarter, as Teresa mentioned in the remarks, was really the most significant quarter that we had as it relates to adding homes passed. And we continue to, as I said, see almost a full range of opportunities to continue to expand into the future.

布兰登,这是富有。关于Edge-Out渗透的问题。实际上,我们并不担心年度队列中的渗透率不同。原因是,我将无限地虚拟地看到巨大的机会。在我们进行下一步工作并评估下一个项目时,构建我们正在研究的网络扩展项目的实际成本是Edge-Outs,每个项目都有很大的不同。并且,尤其是关于网络成本的基本扩展到该新社区。有些社区可以是空中的,有些必须是地下的。我们要建设的社区内部房屋的密度可能会有很大差异。因此,项目成本分析中涉及多个变量。

当然,渗透率非常重要,因为它可以清楚地表明我们已经获得的收入机会。但是从相对的角度来看,您可能会有较低的渗透率,而另一组人却仍然具有相同的回报机会,即使不是更多,这都取决于构建成本。

因此,我们绝不相信我们会达到与Edge-Out机会相关的任何极限。正如特雷莎(Teresa)在评论中提到的那样,第三季度确实是我们拥有的最重要的季度,因为它与增加房屋的使用有关。正如我所说,我们继续看到几乎所有机会,可以继续扩展到未来。

Teresa Elder

Teresa Elder

And Brandon, I'll go ahead and answer your third question just by saying, 100 meg continues to be our most popular. We do have certainly some legacy customers that are at speeds below that. But what we continue to see is that the take rate of new customers continues to move to the higher speeds, and we also are encouraging and having a higher take rate of those customers taking Whole-Home WiFi, both of which increase the ARPU and enhance the customer experience. And I think this is once again another way that really underlines how we are so well positioned to take advantage of the growth in OTT services.

布兰登,我会继续回答您的第三个问题,只是说100兆克仍然是我们最受欢迎的。 当然,我们确实有一些旧客户,其速度低于此速度。 但是,我们继续看到的是,新客户的使用率继续向更高的速度发展,我们也对采用全家WiFi的客户感到鼓舞并拥有更高的使用率,这两者均提高了ARPU并提高了 客户体验。 我认为这又是另一种方式,这确实突显了我们如何能够很好地利用OTT服务的增长。

会议主持员

We'll take our next question from Kyle Evans with Stephens.

我们将与Kyle Evans和Stephens讨论下一个问题。

Kyle Evans

凯尔·埃文斯

We've been circling that video price increase on this call and I'm going to hit that dead horse a few more times. How big is that increase on a percentage basis? And then what are your expectations for video churn based on prior increases? And then I have a few follow-ups as well.

在这次通话中,我们一直在盘旋视频价格上涨,而我将再打几下。 按百分比计算,增长幅度是多少? 根据先前的增长,您对视频流失的期望是什么? 然后,我还有一些后续措施。

Lucas Binder

Lucas Binder

So Kyle, it's Lucas here. As far as the specific amount, it's, once again, as Teresa emphasized, it's meant to match the increases in costs so we can draw our own conclusions, but we're not going to specify the amount.
With regard to how it's taken and what is expected out of churn, I would just note that when we put the rate increase in, in February, we actually had a pretty good stick rate. I think we messaged very much around the costs that are incurred, and that's what's passed along. Don't expect any material change in our churn rates than we've been experiencing thus far. Obviously, video is under pressure from a number of other factors and it's not just from rate hike. But we don't expect any different, a spike in churn as a result of this.

凯尔,这是卢卡斯。 至于具体金额,正如特蕾莎修女所强调的,它的意思是与成本的增长相匹配,以便我们得出自己的结论,但我们不会指定金额。

关于如何使用和预期的客户流失率,我只想指出,当我们在2月份提高价格时,实际上有一个很好的坚持率。 我认为我们已就所产生的费用传达了很多信息,这就是所传递的。 不要期望我们到目前为止的流失率有任何实质性的变化。 显然,视频还受到许多其他因素的压力,而不仅仅是加息。 但是,我们预计不会有任何其他变化,因此导致客户流失率飙升。

Teresa Elder

Teresa Elder

Right. The big difference is that we're taking it in December versus in the first quarter like we did last year, or this year rather, 2019.

对。 最大的区别是我们像去年一样,在12月与一季度进行比较,而在今年,则是在2019年。

Kyle Evans

凯尔·埃文斯

And then just a few more high-level ones on TV. What are you guys doing to that bundle or what could you do to that bundle to make it more durable? How much lower is HSD churn when you have that RGU as a video customer? And then how should we think about kind of fully loaded margins on the TV side? I know we can see kind of the gross margin on it, but help us kind of think longer term on a 3- to 5-year basis on fully loaded margins.

然后再是电视上的一些高级节目。 你们对捆绑包做了什么,或者您可以对捆绑包做些什么以使其更耐用? 将RGU作为视频客户时,HSD的流失率降低了多少? 然后,我们应该如何考虑电视端的满负荷余量呢? 我知道我们可以看到它的毛利率,但是可以帮助我们在满载的毛利率的情况下,在3至5年的基础上进行长期思考。

Teresa Elder

Teresa Elder

Yes. I don't think we give projections out that far. What I can tell you is that we still have something over 40% of our new customer acquisitions are looking for a video service in addition to the HSD service. So we continue to follow and listen to our customers and provide a service for them that they enjoy. So we look at the churn on a variety of ways. I would say we are managing both the HSD only as well as video churn very tightly and work hard to retain the customers across the board. And that has shown continued improvement in all of those processes. Anything else on that area, Kyle?

是。我不认为我们给了预测那么远。 我可以告诉您的是,除了HSD服务之外,我们仍有40%以上的新客户获得了视频服务。因此,我们继续跟踪和倾听客户,并为他们提供服务,他们享受。 因此,我们以多种方式看待客户流失。我想说,我们作为视频客户流失管理两个HSD只以及非常严格,努力全线留住客户。这表明在所有这些过程的持续改进。 凯尔,在那边还有什么呢?

会议主持员

It does appear we have no further questions. I'd like to return the floor to Teresa Elder for closing comments.

看来我们没有其他问题了。 我想请特雷莎·埃尔德(Teresa Elder)结束发言。

Teresa Elder

Teresa Elder

Thank you, everyone, for joining us this morning and we continue to appreciate your interest in our business and your support of WOW! Have a great day.

谢谢大家今天早上加入我们,我们将继续感谢您对我们业务的关注以及您对WOW的支持! 祝你有美好的一天。

会议主持员

And this does conclude today's program. You may now disconnect.

并确实完成了今天的程序。 您现在可以断开连接。

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