ATN International Q3 2026 Earnings Call Transcript

ATN International (NASDAQ:ATNI) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

ATN International reported flat consolidated revenue and adjusted EBITDA for Q3 2026, with increases in operating income and EPS post-U.S. tower portfolio sale.

International segment showed strong performance with 2% revenue growth and 9% adjusted EBITDA growth, driven by mobility and broadband services.

The company updated its full-year outlook, expecting adjusted EBITDA to be at the high end or slightly above previously communicated guidance.

Operational highlights include expanding the fiber footprint in Guyana, growth in the Cayman Islands, and strong broadband performance in the U.S., particularly in Alaska.

Management emphasized strategic focus on customer-centric operations and disciplined capital deployment to drive long-term shareholder value.

Full Transcript

OPERATOR

Good day, and thank you for standing by. Welcome to the ATN International Q3 2026 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Michelle Citroski. Please go ahead.

Michelle Citroski (Investor Relations)

Thank you, operator, and good morning, everyone. I’m joined today by Naji Khoury, ATN’s Chief Executive Officer, and Carlos Duglioli, ATN’s Chief Financial Officer. This morning we’ll be reviewing our third quarter 2026 results and updating our 2026 outlook. As a reminder, we announced our 2026 third quarter results yesterday 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 that could cause actual results to differ from those described. In an effort to provide useful information for our investors, our comments today include non-GAAP financial measures. For details on those 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 8-K filing provided to the SEC. I would now like to turn the call over to Naji.

Naji Khoury (Chief Executive Officer)

Thank you, Michelle, and good morning, everyone. During the third quarter, I continued to spend time in our markets listening to employees, customers, and investors. Those conversations reinforce my belief that the best way to unlock the potential of each market is to stay close to our customers and simplify how we operate. We have a clear sense of where we want to go over the next several years and, while the work will take time, we are focused on making steady progress.

I am confident that a more customer-focused organization will be better positioned to drive growth, improve profitability, and create lasting value. I’ll begin with a high-level overview of our quarterly performance and then discuss developments across our markets, including the opportunities we see ahead. Now let’s turn to Slide 3. During the third quarter, consolidated revenue and adjusted EBITDA remained flat year over year, while operating income and earnings per share increased, even with the impact of the second quarter U.S. tower portfolio sale. Excluding the impact of the sale, communications services revenue would have increased by 1% and adjusted EBITDA by 6%. Strong performance in our International segment amid the heightened competitive environment, together with continued improvement in our U.S. segment, particularly Alaska, reflects the benefit of our strategic initiatives and underscores the resilience of our business.

These results demonstrate how targeted capital deployment and disciplined execution continue to support operating performance. Based on our performance to date and expectations for the remainder of the year, we are updating our full-year outlook and now anticipate adjusted EBITDA will be at the high end of or modestly above our previously communicated guidance range. Our strong financial position provides flexibility for future investment while we remain focused on long-term shareholder value.

Turning now to the International segment on Slide 4, mobility subscriber trends reflect a favorable shift in customer mix with postpaid subscribers increasing 4%. A recent billing system upgrade was the primary driver of the prepaid subscriber loss in the quarter. Since last year we have expanded our high-speed broadband footprint, growing homes passed by 4%. While our international operations remain predominantly consumer-focused, we continue to see opportunity to broaden business services reach.

Now let me provide you a brief update on each of our international markets. In Guyana, we continue to expand our fiber footprint, increasing homes passed and growing fixed customer revenue. We believe the country’s economic expansion will continue to create new demand for connectivity and more opportunities for business offerings. We have also invested in our mobile network, enhancing our service offerings and growing both our postpaid subscriber base and consumer mobility revenue.

In conjunction with the investment, we have decommissioned the 2G network and are on track to decommission the copper network. Lastly, we recently announced a partnership with IDB Lab to expand access to digital financial services for Guyana’s unbanked and underbanked population. In the Cayman Islands, our business continues to build momentum with growth across both residential broadband and business services. As we invest in growing our customer base, the team’s deep roots in the community and focus on execution continue to strengthen our competitive position and support growth. We recently were awarded a managed services contract in connection with the planned development of a purpose-built STEM facility financed by DART.

In the U.S. Virgin Islands, the market dynamics are complex and challenging, driven primarily by an unstable power grid. We remain focused on reinforcing our leading position in broadband while improving customer experience. In Bermuda, solid execution continues to support our market-leading position in mobility and broadband services. Now moving to Slide 5. Across the U.S. segment, high-speed broadband homes passed increased 4% year over year, while high-speed broadband subscribers increased 7%. We continue to see opportunities to modernize our network, expand our reach through government-funded broadband initiatives, and migrate customers from legacy networks to higher-performance platforms. In Alaska, strong fixed business and carrier services performance continued this quarter.

Looking forward, we have an opportunity to build on our base by expanding broadband access and continuing the modernization of our network. We also see meaningful opportunities in the residential market as we expand our reach and improve execution. With Cortland Madoc in place as of September 1st as the new CEO across our Southwest markets, we remain focused on expanding our fiber footprint and increasing penetration as we leverage government-supported projects.

Our focus has been and will continue to be executing these projects effectively and converting network investments into sustainable customer and revenue growth. The progress across our markets reflects our continued focus on execution, operational improvement, and disciplined investment. While realizing the potential of these opportunities will take time, we believe the actions we’ve taken to date are strengthening the business and position it for sustainable growth and long-term value creation. In closing, I would like to thank our teams across all markets for their commitment and hard work. Their efforts continue to drive meaningful progress across the business and were instrumental in delivering this quarter’s results.

With that, I’ll turn it over to Carlos to walk us through our financial results for the quarter.

Carlos Duglioli (Chief Financial Officer)

Thank you, Naji, and good morning, everyone. Let me walk you through the third quarter 2026 results and review our updated full-year outlook. Turning to Slide 6, total revenue for the third quarter was flat at $183 million. Strong performance across several areas helped offset the anticipated impact created by the U.S. tower portfolio sale during the quarter. Isolating this impact, the revenue would have grown by 1%. As Naji highlighted in his opening remarks, operating income for the quarter increased $3 million, or 32%, to $13 million compared to the same quarter last year. The improvement was driven primarily by lower depreciation and amortization and lower losses on asset dispositions.

These items partially offset the expected increase in cost of services resulting from the U.S. tower portfolio sale. On the bottom line, we reported net income attributable to ATN stockholders of approximately $19 million, or $1.09 per share on a diluted basis, which compares to last year’s third quarter net income of approximately $4 million, or $0.18 per diluted share. The year-over-year improvement reflects higher operating income, lower interest expense, and a greater tax benefit.

Adjusted EBITDA for the quarter was $50 million and relatively flat compared to the prior-year period, with the adjusted EBITDA margin holding steady at 27.3%. Excluding the impact of the U.S. tower portfolio sale, adjusted EBITDA would have increased 6% year over year, highlighting the focus on improving profitability. Let me turn now to the segment performance, starting on Slide 7. In our International segment, we continued to deliver year-over-year revenue growth and margin expansion. Total revenue increased 2% to $97 million, while adjusted EBITDA grew 9% to $36 million, and adjusted EBITDA margin increased by 240 basis points to 37.4%. Growth in ancillary communication services, together with certain non-recurring items in carrier services and mobility, helped to offset the previously disclosed loss of government support in the U.S. Virgin Islands.

We have one remaining quarter of unfavorable year-over-year comparisons related to this island. Revenue growth combined with favorable operating expense timing contributed to the expansion in adjusted EBITDA margin. Now turning to Slide 8. In our domestic segment, revenue was $86 million, down 2% or nearly $2 million. Year-over-year growth in carrier services and fixed business revenue partly helped offset the revenue decline anticipated and announced following the U.S. tower portfolio sale, as well as lower construction activity. Communication service revenues would have increased by 1% when excluding the $1.4 million in foregone tower rent revenue resulting from the transaction.

Adjusted EBITDA for the quarter was approximately $19 million, and the adjusted EBITDA margin was 21.7% and consistent with the second quarter post-sale level. Adjusted EBITDA would have increased 2% and the adjusted EBITDA margin would have expanded 60 basis points, excluding the $1.5 million increase in operating costs and the reduction in tower rent revenue resulting from the U.S. tower portfolio sale. We expect a similar impact in the fourth quarter, which is built into our outlook.

As discussed last quarter, we continue to expect subsequent closings to occur over the next seven months, with the potential for up to an additional $30 million in proceeds from remaining sites deferred at the initial closing. With that, let’s turn to Slide 9 to go over leverage and liquidity. We ended the quarter with $351 million in cash, cash equivalents, and restricted cash, representing an increase of $234 million from year-end. Total debt declined to $538 million, and our net leverage ratio improved to 0.94 times from 2.36 times at year-end 2025. The improvement was driven primarily by the debt reduction enabled by proceeds from the initial close of the tower sale earlier in the year.

As a reminder, approximately 45% of our debt is currently insulated from interest rate fluctuations. In addition, roughly three-quarters of our outstanding debt is ring-fenced at the subsidiary level and is non-recourse to the ATN parent company. For the first nine months of the year, net cash from operating activities was $77 million, compared with $98 million in the prior-year period. The decrease primarily reflects working capital timing. Turning to Slide 10, capital expenditures for the first nine months of the year were $66 million, a $5 million increase versus the same period last year. The reimbursable CapEx spend was $35 million versus $67 million last year, reflecting the variable timing of our government programs. As a reminder, our capital expenditure plans are managed on a full-year basis and, while quarterly spending may fluctuate, we continue to expect capital expenditures for the full year to remain within our guided range.

Now turning to Slide 11. Quarterly cash dividends of $0.29 per share paid on October 9 reflected a 5.5% increase approved by the Board in June. In July, the Board authorized an expansion of the share repurchase program to $30 million, and the full amount remained available as of September 30, 2026. Turning now to Slide 12 for our outlook for 2026, we updated the full-year 2026 adjusted EBITDA expectations to be at the high end of or modestly above the previously communicated range of $183 million to $193 million. We also expect capital expenditures, net of reimbursable spending, to remain in the range of $105 million to $115 million for the year.

In closing, we delivered another quarter of solid execution. While we faced heightened competition and some operational challenges during the quarter, we delivered stable revenue and adjusted EBITDA results. Combined with the strength of our balance sheet, we remain well positioned to invest in our operations, maintain financial flexibility, and create long-term value for shareholders. With that financial overview, I will now turn the call to the operator for questions.

OPERATOR

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 star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. Our first question comes from Greg Burns from Sidoti. Please go ahead.

Greg Burns (Analyst)

Morning. Can you just give us a little bit more color on the higher competition that you’re seeing in certain international markets? Which markets particularly, and maybe which services are seeing the most competition?

Naji Khoury (Chief Executive Officer)

Greg, good morning, this is Naji. Yeah, I mean, we’re seeing heightened competition across the market. It’s mostly in broadband and in prepaid. The dynamic is quite different. On the mobile side, we see a lot of activity on prepaid, and we’ve been offsetting a lot of that with focusing on postpaid, which has worked really well for us in mostly all the markets. So we feel strong about our mobile positioning. On the broadband side, we hold a good position in most of the markets.

There are some markets where we have a bit more competition than others, but we feel we’re in a good position either with a fiber network or an HFC network. So, you know, we have a good position. In some of the markets we have a higher penetration than others, but that’s the dynamic of different markets. But there’s a bit of higher competition. And you might ask about Starlink. We’re seeing some of it, but so far it has not been a significant impact on our business, specifically in the Caribbean.

Greg Burns (Analyst)

Okay. So from a broadband perspective, it’s across the markets. There’s not one particular market where you’re seeing competition.

Naji Khoury (Chief Executive Officer)

We did mention in our release there was a bit more competition in the U.S. Virgin Islands. We see it as well, but we’ve been able to manage it well. That would be the single market I would point out, yes.

Greg Burns (Analyst)

Okay. All right. And then in the U.S., looks like you’re gaining some traction, had good broadband subscriber growth. Was that in Alaska or the Southwest or across those markets? And maybe could you highlight some of the commercial go-to-market changes you’re making to grow the consumer side of that business?

Naji Khoury (Chief Executive Officer)

Yeah, listen, it is in fact in both markets in the Southwest and Alaska. Heavy focus on commercial execution, price discipline. So the team has shifted a bit the way we do things on the ground. We’re seeing improvement on our fiber uptake, we’re seeing improvement on our penetration. We’re also seeing a decrease in churn. So all the key metrics, or all the leading indicator metrics, are heading in the right direction. So, yes, we’re happy with some of the results on the domestic side.

Absolutely.

Greg Burns (Analyst)

Okay. In the press release you mentioned the timing of subsidy payments in the U.S. Can you just give us a little more color on that, how much that was, and is that expected to hit in the fourth quarter?

Carlos Duglioli (Chief Financial Officer)

Hey, Greg, this is Carlos. Yeah, it was probably what we usually recognize, you know, it’s in Southwest. Mostly it’s timing of some of those monthly payments. We expect those to regularize over the next quarter or two. So if there’s an impact, we expect that it’s really going to be more like timing and we should get back on track as that regularizes.

Greg Burns (Analyst)

How big was the number this quarter?

Carlos Duglioli (Chief Financial Officer)

I would say it was probably around, like, you know, it’s got to be around half a million bucks.

Greg Burns (Analyst)

Okay, okay. And then can you just give us a little bit more detail on the tax benefit this quarter, and what is a normalized tax rate we should be considering going forward?

Carlos Duglioli (Chief Financial Officer)

I think from a tax perspective, given the different jurisdictions, we continue to focus on kind of the cash tax, which will remain around that four or five million bucks. The benefit that we had in Q3 was a discrete benefit related to a foreign entity, so it’s a non-recurring item. The regular rate we have is between 15% and 20%. But again, from a cash perspective, it remains around that four or five million bucks annually.

Greg Burns (Analyst)

Okay, great. And then just lastly, obviously strong margin performance internationally and even better than I think expected in the U.S., considering the sale of the towers. What are your views on the margin profiles of both those businesses and where you could get them over time given the current scale or the current revenue trends you’re seeing in those businesses?

Naji Khoury (Chief Executive Officer)

You know, Greg, as we said before, we haven’t guided to a specific number, but we did mention that we’re seeing an improvement in the profitability, and you see sequential quarter on the international side by about 200 basis points. So we are on the right trend. You know, we’re seeing a good trend in the international market, we’re seeing a good trend in the domestic market. We haven’t guided a specific number, but you can easily assume that the number will improve over time.

So more to come, but at this stage, that’s how much I can tell you.

Greg Burns (Analyst)

Okay, great. All right, thank you.

OPERATOR

Thank you. I am showing no further questions at this time. I would now like to turn it back to Naji for closing remarks.

Naji Khoury (Chief Executive Officer)

Thank you, operator. And thank you again for joining us today and for your continued interest in ATN. We look forward to updating you on our continued progress during our fourth quarter earnings call in early March. Thank you.

OPERATOR

Thank you for your participation in today’s conference. This does conclude the program, and you may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.