ATN International (NASDAQ:ATNI) Q1 2026 Earnings Call

0:00 The announced loss of the high cost support subsidy, core telecom revenues grew 3% year over year. The improvement was driven primarily by increases in business, carrier services, and other ancillary revenues, which helped offset the expected subsidy related decline. We delivered operating income of $11,700,000 for the quarter, up $9,000,000 versus last year. This improvement was largely driven by revenue growth, our ongoing cost management efforts, and reduced depreciation and amortization expense. We incurred approximately $2,000,000 of restructuring and reorganization expenses in the first quarter and expect to incur an additional $1,000,000 to $2,000,000 of these costs in the second quarter.

0:51 As we previously stated, these actions are embedded in our adjusted EBITDA outlook. On the bottom line, we reported a net loss attributable to ATN stockholders of 3,000,000 or $0.29 per share, an improvement of approximately $6,000,000 compared to last year's first quarter loss of $9,000,000 or $0.69 per share. Across both our International and U. S. Segments, we achieved growth in the quarter, bringing total adjusted EBITDA to $49,000,000 for the quarter, up 10% year over year. Total adjusted EBITDA margin improved 200 basis points to 26.7% compared to the prior year period.

1:37 This improvement reflects our continued focus on cost discipline and margin expansion across the business. Let me turn now to segment performance. In our International segment, we continue to see steady top line growth and margin expansion. Total revenue increased 2% to 96,000,000 and adjusted EBITDA was $34,000,000 up 6% from the same period last year. The revenue increase reflects growth in carrier services and other ancillary revenues, combined with increases in business and postpaid consumer mobility subscribers, which offset the decline in prepaid mobility SaaS. Fixed consumer revenue declined year over year due to the anticipated end of the government support in the USVI.

2:29 On a like to like basis, revenues grew three percent, we're normalizing the impact of the support revenue. Higher revenue combined with lower costs drove the increase in adjusted EBITDA and expanded the adjusted EBITDA margin by 140 basis points from 34.3% to 35.7% for the first quarter. In our domestic segment, revenue was $86,000,000 up about 2% year over year. Adjusted EBITDA increased 11% in the quarter to 19,000,000 Higher carrier services revenue resulting from steady progress in some of our key projects, combined with an increase in fixed business revenues, more than offset the absence of construction revenues in the quarter.

3:20 Normalizing the impact of construction revenues, revenues were up 3% year over year. Higher revenue levels combined with cost discipline drove the increase in profitability. Now turning to the balance sheet and cash flow. We ended the quarter with a total of $123,000,000 in cash, cash equivalents and restricted cash, up $6,000,000 from year end. Total debt was $570,000,000 up $5,000,000 from the end of twenty twenty five. Our net debt ratio improved to 2.3 times from 2.36 times at the end of twenty twenty five, benefiting from higher adjusted EBITDA. Approximately three quarters of our outstanding debt sits at the subsidiary level and is non recourse to ATN parent.

4:13 Net cash from operating activities decreased by approximately $6,000,000 compared to Q1 last year, primarily driven by higher working capital requirements related to the timing of certain government program payments. First quarter capital expenditures were flat at $21,000,000 versus the same period last year. Reimbursable CapEx spend declined to $14,000,000 versus $22,000,000 last year. It's worth noting that we manage our capital expenditures on an annual basis and we expect spending to remain in line with our guided range for 2026. Turning now to our outlook for 2026. As a reminder, in February, we announced that our ComNet subsidiaries entered into an agreement to sell a portfolio of two fourteen towers and related operations in the Southwestern U. S.

5:09 For up to $297,000,000 We remain on track for an initial closing in the second quarter with expected gross cash proceeds in the same range of $250,000,000 to $270,000,000 as initially communicated. Additional closings totaling $27,000,000 to $47,000,000 are anticipated over the following twelve months tied to construction and operational milestones. Excluding any impact from the tower transaction, we expect full year 2026 adjusted EBITDA to increase modestly from twenty twenty five levels in the range of $190,000,000 to 200,000,000 Following the initial tower sale close in the second quarter, we would expect a reduction in annual adjusted EBITDA of approximately 6,000,000 to $8,000,000 We plan to reassess and update as appropriate the 2026 full year outlook after the initial closing.

6:10 We also expect capital expenditures net of reimbursable spending to remain in the range of $105,000,000 to $115,000,000 for the year. Overall, we experienced momentum and saw progress in the first quarter. Looking ahead, our financial priorities remain the same: improving margins, expanding cash flow generation, and maintaining a healthy balance sheet. We're encouraged by our recent performance, and our 2026 outlook reflects the commitment towards those goals. With that, I will turn the call back to Nati for closing comments before we open it up for questions. Thank you, Carlos. As you've heard, we started the year on a good note. And as stated at the beginning of the call, I am encouraged by the strength of our teams, the solid foundation across the business and the revenue and profitability gains in the quarter.

7:06 I see clear opportunities to simplify how we operate, sharpen execution, and continue to ensure disciplined capital allocation. I am confident our team will deliver on our priorities. My focus will be to translate these observations into concrete action that support long term value creation. With that, we'll now open the call for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while we compile the Q and A roster. Thank you. Our first question comes from the line of Greg Burns of Sidoti.

8:00 Your line is now open. Good morning. Just in regards to disclosures, why did you stop disclosing total broadband homes passed and subscribers?

8:14 Hey, Greg. How are doing? This is Carlos. Yeah, we felt that it included a number of the legacy products that we were actively decommissioning. So, we thought that kind of like focusing on the high speed SaaS, which is where we're putting all the efforts and investment was more appropriate. Okay. And then in terms of monetization of all the investment you've made over the last couple of years in your network, What do you think has been the biggest bottleneck in terms of driving faster growth or adoption in some of your markets? Has it been increased competition?

8:55 Has it been pricing pressure? Why haven't you been able to drive the stronger subscriber growth now that you've moved past the investment phase and we're in the monetization phase?

9:11 Why hasn't that monetization been stronger? Yeah, so, look, we believe that there's been a good amount of monetization, Greg. When you look at the revenue trends, we've seen growth year over year. Certainly there's been additional competition, especially on mobility side of things. But we believe that things are tracking in the right direction. I don't know, Najee, if you want to add any comments. Greg, good morning. I think also we have to focus on migration from subscribers in our copper network as well. So there's a bit of execution on the ground, but everything indicates that we're heading in the right direction.

9:58 So at this stage, I'm not worried about our ability to add subscribers to the fiber network. Okay. And then any update around Bead or other government subsidy programs? Maybe the pipeline of opportunities there or the timing on awards that you've won? The timing of build and monetization of the awards you've already won? Yeah, I think we're working through some of the programs that we already had and that we talked about in previous calls, which are in the range of a couple $100,000,000. In addition to that, then we have the provisional awards of BEAT that are over around $140,000,000 in total between the Southwest and Alaska. And we're very excited.

10:47 We believe that those are good areas that we were awarded and that they will give us access to around 10,000 or so homes and obviously whatever we're able to access on our way to some of those locations. So we're excited about that. Does your full year guidance for this year contemplate, I guess, the beginning of revenue monetization of some of these previous programs you've been awarded and would be be more of like a 27, 28? Yeah. Bead gonna opportunity? Yeah. Sorry.

11:32 You know, go ahead. No, I was done. Sorry. Yeah. So, you know, be it is going to be more like, you know, the next, you know, the coming years is not going to have any significant impact or impact on 2026. There's still a process to be completed before gets going. So we'll see that in the future years. Okay. All right. Thank you. Thank you. This concludes the question and answer session. I would now like to turn it back to Naji Gouri, Chief Executive Officer, for closing remarks. Thank you again for joining us today and for your questions.

12:17 Our team looks forward to continuing the dialogue through upcoming conferences and in one on one meetings and updating you on our progress as we move through 2026. Thank you. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.