ATN International, Inc. Q3 FY2025 earnings call

• Recognized exceptional work of teams across markets. - Third quarter results show continued execution of strategic plan and operational improvements. - International segment: Steady progress on key priorities like enhancing mobile networks, improving service quality, driving operational efficiency; revenues up 1%, adjusted EBITDA up 3%. - U.S. segment: Tangible benefits from investments in carrier and enterprise solutions; revenues excluding construction up 3.5% y-o-y, adjusted EBITDA up 19.6% y-o-y; focused on expanding fiber and fiber-fed fixed wireless, growing business and carrier solutions. - Broadband infrastructure expansion in U.S. progressing as planned with government-funded projects; monitoring federal broadband policy developments. - Internationally: Tracking geopolitical developments and hurricane season in Caribbean; business continuity and network resilience key priorities.

International segment: Q3 revenues up 1% to approximately $95 million, adjusted EBITDA growing 3% to $33.3 million. U.S. Telecom segment: Third quarter revenues, excluding construction revenues, were $87 million, up 3.5% year-over-year. Adjusted EBITDA for the quarter was $21.2 million, up 19.6% compared with the same quarter last year. Revenue contribution percentages: International segment revenues were approx 51.8% of total (95 million / 183.2 million), U.S. segment (excluding construction) was approx 47.5% (87 million / 183.2 million).

• Refining adjusted EBITDA guidance for full year 2025 while reaffirming other metrics. - Revenue, excluding construction revenue, expected to be in line with 2024's $725 million. - Adjusted EBITDA expected to be flat to slightly above 2024's $184 million. - Capital expenditures expected to be in the range of $90 million to $100 million net of reimbursements, down from 2024's $110.4 million. - Net debt ratio expected to remain flat with full year 2024 at approximately 2.54x with potential for slight improvement exiting 2025. - Anticipated minor reorganization and restructuring costs in Q4 less than $1 million.

• Tracking geopolitical developments in international operations. - Hurricane season in Caribbean markets; business continuity and network resilience key priorities. - Permitting challenges on Bureau of Land Management lands potentially posing challenges into 2026.

Q: Are you being impacted in any way by the government shutdown? Is it affecting any awards for government subsidy programs or maybe like the rural health care market in Alaska? Are you seeing any impact from the shutdown in any of those areas?

A: Yes, really all payments. We've not seen any impact with regard to payments on programs, subsidies that we typically participate in. And we expect no impact here really through Q4. On that -- things preventing the future longer, things like permitting, we do a lot on Bureau brand management lands. Permitting things into '26 to pose some challenges. But as of right now, no.

Q: Okay. And it's not delaying the any like new awards? Or is there any other impact to maybe new business development?

A: No. So I mean, one of the primary areas we referenced in the call is BEAD and BEAD is still in the review cycle under [ NTIA ] expected results from that will be in January. So we're expecting those schedules to be held. But no, no impact does it yet.

Q: And you kind of mentioned maybe better pipeline conversion or execution in Alaska. Can you just maybe talk about some of the initiatives you put in place over the last year or so? Kind of get the close rates and the improvement in the execution in Alaska up and what you've done and what you're seeing there in terms of results from those initiatives?

A: Yes. So a couple of fronts there, Greg. And we've had a new team in Alaska. There has been new management in the last year. So with any new leadership team, they come in and really establish their ground game on the ground, and we're happy what the team is doing there. We are, we have been in the process of working with key partnerships. Keep partnerships with the LEO operators to help address more of the -- some of the rural health care opportunities that are in that market, it's a pretty large part of the telecom market in Alaska. And again, and that's some of the progress we're seeing here this year.

Q: Okay. And then just lastly, in terms of cash flow. It's obviously improving nicely this year. What are your priorities going forward -- are you okay with where the leverage is on the business? Or do you want to bring that down? Or do you have other priorities for the improved cash flow that you're seeing?

A: Greg, this is Carlos. So look, we're happy with the way the cash flow is trending as you say, the operating cash flow is doing well. And with a more normalized level of CapEx, we expect to continue to trend leverage down. And at the same time, we are very pleased with the support that we're getting to the business with some of the grants on reimbursable programs that we have there. So we believe that things are working the way we have been expecting and we should continue to be able to push leverage down.