ATN INTERNATIONAL, INC.

(ATNI)
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Delayed Nasdaq  -  04:00 2022-07-06 pm EDT
47.58 USD   -1.06%
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ATN International : 2022 Annual Letter to Stockholders

04/29/2022 | 10:08am EDT

Bringing the Possibilities that Come from Connection

Fellow Stockholders:

Thirty-five years ago, ATN began with a focus on building out voice connections for historically overlooked markets with a need for increased investment in telecommunications infrastructure. ATN's next stage of development centered on building out mobile voice networks connecting more communities and customers. Our following investment and expansion cycle added mobile data solutions to both new and existing markets, giving many customers their first experiences of the benefits and possibilities brought by high-speed data connections.

Entering a New Growth Stage

Today, ATN is in the midst of its next growth phase. We are rapidly deploying fiber and fiber-fed high-speed data solutions to more homes, businesses, schools and communities, as well as to other communications providers. Consistent with our market strategy, we continue to invest in historically underserved and remote markets that are often overlooked by larger players.

Our vision is to bring social and economic prosperity by providing people and communities with the best digital connectivity the world has to offer. Our mission is to digitally empower people and communities so that they can connect with the world and prosper.

Rapidly growing demand for bandwidth and reliable connectivity has spurred the growth of fiber-based networks. We anticipated this need more than five years ago when we began investing heavily in fiber-to-the-premise and fiber to-the-node throughout our rural, island, and Caribbean markets. At the same time, we also made investments in our core infrastructure via middle mile, cell site back-haul, network capacity and long-haul fiber facilities to ensure we had a modern, end-to-end network in place.

We have always believed in providing the same types of communications services and connections to the smaller, more remote, or less affluent communities that are offered to customers residing in the bigger, more competitive markets. It has a positive impact on the communities we serve, and it has been a good investment strategy as well. What makes our strategy especially compelling now are the forces driving rapidly increasing demand.

Providing Essential Services for All: Tailwinds for Demand

The challenges highlighted by the global pandemic have driven home the importance of communications services. Over the past two years, consumers, governments, and businesses have increasingly realized that high-speed connectivity is an essential service for all - students, families, businesses, government agencies, and health care facilities. This is a significant demand driver for ATN. Like many, I believe that this demand is poised to grow even faster as innovations and inventions are further catalyzed by the rapid uptake of low-latency, high-capacity connectivity over much broader areas and populations. This happened with the many services we now take for granted that were originally launched after 3G and then 4G mobile data connections became common.

In our U.S. markets, the resolve by both federal and local governments to offer meaningful investment incentives for critical broadband infrastructure in long under-served markets is fueling demand. We know these markets well, and we are highly experienced in working with government support programs and crafting public-private partnerships. We have an established history of filling in mobile "white space" in uncovered areas in the southwestern and mountain west states. We can do the same with fiber. We have partnered with multiple Native American tribes to deliver critical communications infrastructure to their lands and people. In light of the increased governmental incentives and subsidies being proposed, we have a great opportunity to accelerate these efforts in an economically viable fashion.

Our acquisition of Alaska Communications fits very well into this playbook. As I write this, our teams already are hard at work submitting proposals to greatly improve the cost and quality of connectivity for the communities that are part of the Alaskan Native Corporations' lands. By bringing connectivity to remote communities in Western Alaska under an Emergency Connectivity Fund program, we already have achieved some early success. We hope and expect to do much more.

Market Climate and Consolidated Operating Results

The positive influence of our Alaska Communications acquisition was immediate. This was most apparent at the top of our income statement for the full year, with consolidated revenues growing by 32% year over year to $603 million.

With our expanded reach in the U.S., the global spotlight on the essential nature of communications services, and the increased demand for bandwidth, we are in a period of investment and growth. During 2021, we leaned into our fiber-first build and operate platform strategy and worked to further our coverage in existing, less developed markets. At the same time, we worked to increase our share of more mature markets. We recorded a net loss of $22 million for the year, or $1.52 per share, due to higher operating costs, including transaction expenses related to the Alaska acquisition, along with a goodwill impairment charge for our Virgin Islands business following regulatory and other developments there. Our earnings before interest, taxes, depreciation, and amortization, or EBITDA, after adding back the non-cash loss and certain transaction expenses, was $129 million (reported as "Adjusted EBITDA1"), representing an increase of 7% year over year.

International Telecom Segment: Strength and Stability

Our International Telecom segment remained highly reliable and delivered a record $343 million in revenues for 2021, representing 57% of the Company's total revenue for the year. Going forward, we expect an even more balanced split between domestic and international segment revenues overall.

In addition to expanding the reach of our fiber-based networks, our international markets have been successful in growing our mobility subscriber count. Increased tourism and travel also helped to relieve some economic pressure in our U.S. Virgin Islands, Bermuda and Cayman Islands markets. We also see demand tailwinds for our connectivity and related services coming from the emergence of Guyana as one of the fastest-growing economies in the world. We believe there is great growth potential in Guyana with its rising GDP, improving economic and business climate, increased public and private investment in critical infrastructure and a population that puts a high priority on education and can draw on the experience and resources of the highly successful Guyanese diaspora.

U.S. Telecom Segment: Stronger Foothold Established

Our U.S. Telecom segment delivered a record $259 million in revenues in 2021. The strategic acquisition of Alaska Communications led to a substantial increase in our domestic footprint, provided us with a stronger platform in the U.S., and fueled our business momentum as we exited the year.

As we accelerate our pivot to a "glass and steel" and fiber-first strategy in the U.S., we are slowly phasing out our legacy wholesale wireless services. We are looking to expand what we call our carrier managed services, which includes fiber and other backhaul solutions, tower builds and leasing, and field technical services. As a part of this we are investing in our fiber connections to communications towers and adding to and upgrading our tower portfolio. We also are working more with local communities to connect more businesses, schools, and households to high-speed services. This should put us in a position to grow our base of recurring revenue and broaden the economic base in the markets we serve. As a result, we expect our domestic segment to generate EBITDA growth in the second half of 2022, as the operating burden of the legacy business lessens, and these new investments begin to deliver returns.

1

See our press release dated April 27, 2022 for reconciliation of Operating Income to Adjusted EBITDA a non-GAAP measure.

Adding Value for All Stakeholders: ESG

We undertook a journey in 2021 to explore our Environmental, Social, and Governance (commonly referred to as "ESG") strengths and opportunities. In doing so, it was clear that our commitment to bring the best connectivity the world has to offer brings possibilities to our markets, and aids in the effort to close the digital divide. We believe strongly that our work enables economic and social empowerment in the markets we serve and invite you to read more about our ESG story and process by visitingwww.ATNI.com.

Summary and Outlook

In summary, 2021 was an important building year for ATN. We invested in key strategic areas, completed the Alaska Communications acquisition, advanced our business transition in the U.S., launched our official ESG journey, and positioned the company to deliver increased shareholder value over the long term.

Looking forward, we are following our newly announced three-year growth plan2. The financial targets in our plan are based on our commitment to advancing our fiber-first platform strategy. For example, we aim to achieve a revenue compound annual growth rate (CAGR), excluding construction revenue, of 4 - 6%, which should lead to annual revenue in the range of $770 to $810 million in 2024. We are targeting an Adjusted EBITDA3 CAGR between 8 - 10% over the same three-year period as our operating scale increases. Following this multi-year investment cycle, we expect network capital expenditures to return to more normalized levels of 10 - 15% of revenue. Our expectation is to achieve these targets without overburdening our balance sheet with debt, as we aim to have a Net Debt Ratio3 of less than 1.5x by the end of 2024.

Given our balance sheet strength, human capital, quality risk management controls, and long-term vision, we believe that we have adequate resources to accomplish these goals, inclusive of organic and inorganic growth opportunities.

With more than three decades of building out modern communication services, it has become clear that what ATN truly does is provide access to opportunity and the global marketplace: a marketplace for both ideas and commerce. And where we are headed includes greater reach, profitability, and growth, as well as greater positive impact for the people and communities we serve.

ATN is focused on building and operating a strong communications network and subscriber base in historically underbuilt and underserved market segments. This strategy delivers high recurring revenues, durable cash flows, and long-term shareholder value.

***

2 3

ATN International, Inc. first announced its three-year growth plan on February 23, 2022.

For the Company's 2022 Guidance Adjusted EBITDA and Three Year Outlook Adjusted EBITDA and Net Debt Ratio, the Company is not able to provide without unreasonable effort the most directly comparable GAAP financial measures, or reconciliations to such GAAP financial measures, on a forward-looking basis. Please see "Use of Non-GAAP Financial Measures" below for a full description of items excluded from the Company's expected Adjusted EBITDA and Net Debt Ratio.

Governance Strength: Board of Director Transition

In tandem with this letter, you will find our Proxy Statement. Within the Proxy, you will notice two changes to the director slate submitted to stockholders for approval. The first is the absence of Jack Kennedy, who joined the board of directors in 2018. Jack is the founder and chief executive officer of an exciting and rapidly growing company, Platform Science. At its current stage of growth and development, Jack believed he needed to reduce his external obligations and focus entirely on the opportunities ahead of Platform Science. While I understand and respect his priorities, I will greatly miss his contributions to ATN. Jack, a former naval officer and strategic and new business leader at Qualcomm and News Corporation, had an ability to cut through the noise and bring our eyes up to the horizon. He also has been a valued adviser and resource for me personally.

Never one to sit on his hands, Jack made another valuable contribution ahead of his departure: proposing that we consider April Henry as an addition to the board. After getting to know April, we decided to appoint her to the board in March 2022, and she is on the slate for your consideration at the annual meeting alongside the rest of board. April is the founder and managing partner of Hawkeye Digital, a firm focused on driving revenue growth, core decision-making, and business and human capital transformation for companies at critical points in their growth cycles. With her years at NBCUniversal and as a research analyst covering telecommunications and technology companies at Morgan Stanley, April brings significant merger and acquisition experience, and a deep appreciation for the shareholder perspective. With the addition of April, we will have appointed two new members to the board in the past three years.

***

Thank you for your continued interest in ATN. Please contact me if you have any questions or comments on the contents of this letter or otherwise.

Michael T. Prior

Chairman of the Board and Chief Executive Officer

April 28, 2022

Disclaimer

ATN International Inc. published this content on 29 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 April 2022 14:06:34 UTC.


© Publicnow 2022
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Financials (USD)
Sales 2022 721 M - -
Net income 2022 -1,88 M - -
Net Debt 2022 343 M - -
P/E ratio 2022 -227x
Yield 2022 1,44%
Capitalization 738 M 738 M -
EV / Sales 2022 1,50x
EV / Sales 2023 1,45x
Nbr of Employees 2 300
Free-Float 61,6%
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Michael T. Prior Chairman, President & Chief Executive Officer
Justin D. Benincasa Chief Financial Officer
Brad W. Martin Chief Operating Officer
Liane J. Pelletier Lead Independent Director
Bernie J. Bulkin Independent Non-Executive Director
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