ATN International (NASDAQ:ATNI) Q4 2025 Earnings Call

0:00 Hello, and thank you for standing by. Welcome to ATN International Fourth Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. To ask the question during the session, you will need to press 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. I would now like to hand the conference over to Michelle Sutrovsky. You may begin. Thank you, operator, and good morning, everyone. I'm joined today by Brad Martin, ATN's Chief Executive Officer, and Carlos Stoblioli, ATN's Chief Financial Officer.

0:49 This morning, we'll be reviewing our fourth quarter and full year 2025 results and providing our 2026 outlook. As a reminder, we announced our twenty twenty five fourth quarter 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 certain forward looking statements concerning our current expectations, objectives, and underlying assumptions regarding our future operations. These statements are subject to risks and uncertainties and that could cause actual results to differ from those described.

1:35 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 ir.atni.com or the eight ks filing provided to the SEC. Now I'll turn the call over to Brad. Good morning, and thank you for joining us to discuss ATN's fourth quarter and full year 2025 results. Before I get into the details, I want to recognize the exceptional work of our teams across all of our markets. The progress we delivered this year, both in our financial performance and in the underlying health of the business, reflects their commitment to operational excellence and to building long term value for our customers and shareholders.

2:33 Our fourth quarter results show the continued execution of our strategic plan and further validate the operational improvements we've been implementing across our business segments. In the quarter, we grew revenue, expanded adjusted EBITDA, and improved operating income while continuing to expand our base of high speed broadband homes passed and high speed subscribers. For the full year, that execution translated into higher operating profitability, stronger cash generation, and a business that is better aligned with our strategic focus on mobility, high speed data, and differentiated carrier and enterprise solutions. While there's still more work ahead to fully optimize the business, I believe we are on the right track.

3:22 2025 was a turning point for ATN as we shifted from stabilizing the business to clearly demonstrating progress against our strategy. We increased net cash provided by operating activities, reduced capital intensity while continuing to invest in our networks, and grew and improved the quality and durability of our mobility and high speed subscriber bases across our markets. At the same time, we improved operating income, expanded full year adjusted EBITDA, and held revenues essentially flat year over year. Together with the recently announced pending sale of our Southwest US portfolio of towers, this positions us to enter 2026 with greater resilience, more flexibility, and with a clear focus on our core strategic objectives.

4:14 Let me take a moment to review the performance of our two business segments in the fourth quarter. In our International segment, our network investments and focus on service quality are driving growth in mobility and high speed data subscribers and contributing to adjusted EBITDA expansion. We are seeing the benefits in better network performance, stronger customer retention, and higher data usage, which together support a more durable earnings profile in these markets. We remain focused on deepening customer relationships, continuing to upgrade our networks, and optimizing our operations to further enhance profitability and long term value. In our US segment, we are seeing tangible benefits from the strategic shift we've been executing in response to changing industry dynamics, particularly in combat.

5:04 As our large carrier customers have expanded and matured their own product offerings, our approach has been to deepen our role as a partner to increase carrier managed services while steadily pivoting away from legacy subsidized and lower margin consumer offerings in certain Southwest consumer markets. This strategy is gaining traction, and we are seeing improved performance as a result, particularly in the second half of twenty twenty five. We have a durable presence in Alaska and New Mexico anchored by fiber and fiber fed fixed wireless infrastructure that's supporting growth in the consumer broadband and carrier services. Over the past year, the number of homes passed by high speed broadband increased 25%, driven primarily by Alaska's deployment of fiber fed fixed wireless solutions across Anchorage, Fairbanks, Juneau, and the Kenai Peninsula.

5:59 These efforts contributed to fourth quarter revenue growth and create opportunity for additional subscriber growth. At the same time, our structural cost actions drove higher operating income and improved margins, particularly in the second half of twenty twenty five. Domestically, our broadband infrastructure expansion continued to progress as planned, with several government supported projects advancing through key milestones during the quarter. These investments remain central to our long term U. S. Growth strategy, enhancing our network capabilities and creating new revenue opportunities as deployments are completed. We continue to leverage available government funding, including federal broadband programs, while maintaining a careful disciplined approach to capital deployment and aligning spend with the highest return opportunities.

6:51 We also recently advanced several important strategic initiatives. First, we received notice of provisional deed awards and preliminary commitments totaling more than $150,000,000 in key markets such as New Mexico and Alaska, expanding our opportunity to pass additional homes with fiber and high speed broadband in underserved communities and reinforcing our position as a partner of choice in these regions. We're approaching these programs selectively and expect to invest approximately 10% to 15% of total project costs with our own capital, ensuring that these supported builds align with our financial return thresholds and long term infrastructure strategy. We currently expect these initiatives to begin contributing to our business results in 2027 and beyond.

7:40 In addition, we completed the sale of certain US spectrum assets, allowing us to unlock value and further optimize our operations, reinforcing our focus on infrastructure and service based revenue streams. Taken together, these actions support the long term growth potential of our US business and demonstrate our ability to attract incremental government funding for network expansion and monetize noncore assets in a disciplined way. Just after year end, we took another important step with the announced pending sale of our Southwest US tower portfolio for up to $297,000,000 in total cash consideration. Upon full completion, we expect the divestiture to modestly reduce revenue and EBITDA associated with those assets while providing meaningful proceeds to strengthen our balance sheet and support our long term growth plans.

8:36 This transaction unlocks value from an asset we've built over many years and importantly allows us to sharpen our focus across ATN on our mobility, broadband, and carrier services business. Combined with the operational improvements we delivered in 2025, the tower sale increases our financial flexibility and enhances our ability to invest in sustainable long term value creation. Throughout 2025, we did what we said we would do, advance our strategic plan to improve the profitability and cash generation of our operations, maintain high quality revenue streams and customer relationships, optimize our operating structure, and strengthen the balance sheet. We also grew our mobility and high speed subscriber base across our markets.

9:25 These outcomes reinforce our confidence that we are building a stronger, more efficient ATN. Looking ahead, we are encouraged by the steady momentum across our business segments and remain focused on disciplined execution. Our priority for 2026 is to convert the network and system investments we have made over the past several years into margin expansion, cash flow, and further balance sheet strength. We are entering the year with positive momentum in both our international and US business segments with a more efficient operating model. We are maintaining a disciplined approach to capital allocation and leveraging available government funding to support continued network growth while enhancing returns. The pending tower sale is a key milestone in unlocking asset value and strengthening of our balance sheet, and we intend to use the added flexibility to support our highest priority growth opportunities.

10:20 Before I turn it over to Carlos for a detailed review of our financial performance, I want to leave you with a clear takeaway. Our 2025 results show that ATN is stronger, more efficient, and better positioned than it was a year ago. We remain confident in our ability to build on this progress and generate long term value for our shareholders. With that, I'll hand it over to Carlos for a detailed review of our financial performance. Thank you, Brad, and good morning, everyone. Let me walk you through the 2025 results and provide some context on our 2026 outlook. Our fourth quarter capped a year of improved financial performance, especially in the second half of the year. Total revenues for the fourth quarter grew 2% to $184,200,000 compared with $180,500,000 in the prior year quarter.

11:14 Excluding construction and other revenues, communication service revenues increased 3%, driven by growth across multiple service offerings. For the full year, revenues were essentially flat at $728,000,000 and in line with our expectations. Increases in carrier services, construction and other revenues offset decreases in mobility and fixed revenues driven in part by our transition away from legacy offerings in our U. S. Markets. Operating income was $15,700,000 in the fourth quarter, up from $8,700,000 in the same period last year. The improvement reflects the benefit of cost management efforts, including reductions in selling, general and administrative expenses, and gains on asset dispositions.

12:06 For the full year, operating income increased to $28,400,000 compared with an operating loss of $800,000 in 2024, which included a $35,300,000 goodwill impairment charge. Net loss attributable to ATN stockholders in the fourth quarter was $3,300,000 or $0.32 per share, compared with net income of 3,600,000 or $0.14 per diluted share in the prior year quarter. The change reflects the absence of an $8,900,000 tax benefit that positively impacted Q4 twenty twenty four, along with higher other expense resulting from marking a minority equity investment to market in 2025.

12:57 For the full year, our net loss narrowed to 14,900,000 or $1.38 per share versus a net loss of $26,400,000 or $2.10 per share in 2024. Adjusted EBITDA for the fourth quarter was $50,000,000 up 8% from $46,200,000 in the prior year quarter. For the full year, adjusted EBITDA increased 3% to $190,000,000 compared with $184,100,000 in 2024. The year over year growth in both the quarter and the full year reflects our ongoing focus on cost management and margin improvement. Turning now to segment performance.

13:45 Our International segment continued to deliver top line growth and margin expansion in 2025. The combination of targeted capital investments in support of our commercial progress and disciplined cost management contributed to higher adjusted EBITDA, even as we navigated heightened competitive dynamics in certain markets. Specifically for the fourth quarter, international revenues increased nearly 3% to $97,300,000 from $94,800,000 in the prior year quarter. And for the full year 2025, revenue was up 1% to $381,900,000 from $377,500,000 for full year 2024.

14:31 Adjusted EBITDA for the International segment increased 1% to $32,700,000 for the fourth quarter and approximately 4% to $131,600,000 for the full year. In our Domestic segment, during the fourth quarter, revenues increased 1% to $86,900,000 from $85,800,000 in the prior year quarter. And for the full year 2025, revenue declined just under 2% to $346,100,000 compared with $351,600,000 for full year 2024. Adjusted EBITDA for the domestic segment increased 11% to $21,600,000 for the fourth quarter and declined approximately 2% to $78,500,000 for the full year.

15:25 Our results for the segment reflect the impact of transitioning away from legacy and subsidy driven revenue streams in the first half of the year and the benefits of stronger performance in Carrier Solutions in the second half, supported by continued margin improvement efforts. Let me now turn to the balance sheet and cash flow highlights. Total cash, cash equivalents and restricted cash increased to $117,200,000 at 12/31/2025, compared with $89,200,000 at the end of twenty twenty four. Total debt was $565,200,000 versus $557,400,000 a year ago, resulting in a net debt ratio of 2.36 times as of year end, an improvement from 2.54 times at 12/31/2024.

16:23 Just as a reminder, approximately 60% of total debt resides at the subsidiary level and is non recourse to ATN parent. Net cash provided by operating activities increased 5% year over year to $133,900,000 driven in part by improved working capital management. Capital expenditures for the full year were $90,000,000 net of $84,600,000 in reimbursable capital expenditures, compared with $110,400,000 net of $108,500,000 in reimbursements in 2024. Our capital spending for the year was in the lower end of our guidance range, driven by the timing of some investments that are now expected and incorporated in our twenty twenty six outlook.

17:13 The year over year reduction in net capital spending also reflects our commitment to maintaining more normalized levels of CapEx. We maintained our quarterly dividend of $0.02 $75 per share paid on 01/09/2026 to shareholders of record as of 12/31/2025. We did not repurchase any shares during the quarter. Turning to the 2026 outlook. As Brad mentioned, earlier this month, we announced that our ComNet subsidiaries agreed to sell a portfolio of two fourteen Southwestern U. S. Towers and related operations to an affiliate of Everest Infrastructure Partners for up to $297,000,000 in an all cash transaction.

18:02 We continue to expect the initial closing to occur in the second quarter of twenty twenty six, with gross proceeds of approximately $250,000,000 to $270,000,000 with additional closings occurring over the following twelve months tied to construction and operational milestones. For full year 2026, and excluding any impact from the pending sale of our U. S. Tower portfolio, we expect adjusted EBITDA to increase modestly from twenty twenty five levels to a range of $190,000,000 to $200,000,000 Our 2026 outlook incorporates a headwind of approximately $5,000,000 related to the conclusion of high cost funding support for our U. S. Virgin Islands market. Based on current expectations of the second quarter timing of the initial closing for the tower sale, we would anticipate a reduction of approximately $6,000,000 to $8,000,000 to that annual adjusted EBITDA outlook.

19:02 We also expect capital expenditures to remain within a disciplined range of $105,000,000 to $115,000,000 net of reimbursable expenditures and reflective of the timing of some investments initially expected in 2025. Together with available government funding, this supports continued network growth while maintaining our focus on cash generation and managing leverage. We plan to revisit and update our 2026 outlook as appropriate after the initial closing of the tower portfolio sale. Before handing the call back to Brad, let me provide some insight into how we expect the quarters to play out in 2026. In the first quarter, we expect adjusted EBITDA to improve compared with the prior year period, and we expect the second half of the year to deliver the majority of our annual results, consistent with our typical business seasonality.

20:02 As part of the actions embedded in our plan to achieve our adjusted EBITDA outlook for the year, we expect to incur restructuring and reorganization expenses of $3,000,000 to $4,000,000 in the first half, with most of those costs occurring in the first quarter. Looking ahead, our financial focus remains unchanged. Drive operating efficiencies to support margin expansion, continue to allocate capital in a disciplined way, maintain a healthy balance sheet and expand cash flow. We believe our 2025 results and 2026 outlook show progress toward our long term objectives and in line with maximizing shareholder value. With that financial overview, I'll turn the call back to Brad for closing comments before we open it up for questions.

20:51 Thanks, Carlos. To summarize, we closed 2025 with solid operating momentum, stronger cash generation and a more focused, higher quality revenue mix that supports our long term strategy. We are entering 2026 with a healthier balance sheet, more efficient cost structure, and a clear line of sight to further benefits of our strategic initiatives in the pending tower transaction. With that, we'll now open the call for questions. Thank you. Our first question comes from the line of Greg Burns with Sidoti. Your line is open.

21:49 Good morning. Could you just help us understand maybe how the sale of the tower assets might impact your business model in The US. Does that in any way impact your ability to provide managed services to carriers? Morning Greg. Yes so really it's an unchanged business model. Today we provide our carrier managed services on third party towers and owned towers. Almost about half and half. So really the continuation of the business model will remain. We'll just be doing more on third party towers. All right, great. And then I see you're continuing to grow your high speed data subscribers.

22:35 Total broadband subscribers continue to decline. Are we nearing a point where maybe some of these legacy services that you're turning down or deemphasizing stop detracting from the overall growth of that business? Should we expect next year in terms of maybe your view on broadband subscriber growth? Greg, as you mentioned some of the broadband reductions have been from us shutting down legacy services. That is inclusive of legacy copper services in some markets where we've overbuilt and shut down services and decided not to rebuild in areas.

23:20 And similarly in areas in the Southwest where we've taken down where we had unprofitable areas and we decided to not necessarily compete at the consumer level. As we mentioned in my prepared remarks, we will be continuing to partner with major carriers. We do have Bead outcomes I spoke to in my remarks. We do expect that to be a key driver in the out years to expand our high speed subscriber base and obviously expands our assets and facilities. Okay and with the expansion of the high speed data the reach of your network in Alaska. Could you just talk about maybe some of the changes you've made in your go to market or sales strategy to start to accelerate maybe the penetration and growth of your services?

24:26 Yes so Alaska our Alaska market has been historically heavily weighted towards enterprise and carrier. In this past year they announced a pretty large build out of a fixed wireless solution. We have been building fiber facilities, fiber to the home in certain areas of Alaska as well. We do have a new leadership team in Alaska in the last couple of years. We are investing in back office platforms to effectively enhance the customer interaction. So it's something we're targeting and continue to focus on improving our ability to execute there. But we have work to do. We did see some progress in the back half of the year on subscriber acquisitions specifically in Alaska. Albeit starting on a small base but we did actually show over 11% year over year improvement in our high speed data subscribers.

25:19 Okay, thank you. Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Brad for closing remarks. Thank you, operator. Thank you all again for joining us today and for your questions. We're encouraged by the progress we've made in 2025. We're confident in the path that we're on. We're focused on executing against the priorities we've outlined on today's call. Weeks and months ahead, our teams will be meeting with many of you at conferences and one to one meetings. We look forward to continuing the dialogue and continue updating you on our progress as we move to 2026. Thanks. Have a great day. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.